Liesbeth in Cambodia: project visit Seilanithih

From the Philippines, I continued my trip via Bangkok to Phnom Penh, the capital of Cambodia. Even though the connection was very tight due to a delayed flight from Manila, I managed to arrive in Cambodia on time. Even my suitcase was there! Kao Kok, our country manager in Cambodia picked me up at the airport and drove me to the hotel. The first thing that struck me was the difference in traffic in Phnom Penh compared to Manila. My Philippino colleagues had already told me that it would look like Manila 10 years ago. The city was indeed much more quiet and relaxed. Cars were in the minority and there were no crazy eight lane roads like in Manila. The next day we visited Seilanithih, which is a microfinance institution (MFI) that has been a project partner of Oikocredit since 2007. After a presentation about the organizations achievements and plans for the coming years, we went to a branch in the province of Kampong Cham. The branch we visited started only a year ago and has approximately 800 clients. Loans are provided primarily for agriculture, business and services activities. Since over-indebtedness is a hot topic in the microfinance world nowadays, I asked the branch manager how he and his staff try to avoid it with their clients. He mentioned that it is very difficult to find the right information. However, if they know the client has already a loan with one of the other MFIs in the area, the loan is rejected. They make not only use of the information the client provides and use information from local authorities or, for example, neighbours. Another hot topic in microfinance is transparency about interest rates. The branch we visited had a sign on the wall which was even understandable for me, although it was written in Khmer (main language in Cambodia). It showed the loan types and amounts with the respective monthly interest rate levels (see photo).
















Seilanthih branch manager next to sign with product & interest rate overview.

I also spoke to a few clients in this branch. The first one was Mr. Nuon Mek who is a 39-year-old rice farmer from the village Neang Lerng in Kampong Cham. We met him in the branch when he was making an interest payment (see photo). He has been a client of Seilanithih for 2 years and currently has a loan of KHR 2.5 million (EUR 449) for his rice production. The money is used for seeds, labour and other costs related to the production. With the income from the rice production and some soy bean and cassava production, he is providing for his wife, 4 daughters and 2 sons. The loan from Seilanithih is helpful because before he had only 1 hectare to grow his crops and now he has 3.5 hectares!















Mr. Nuon Mek makes an interest payment in a Seilanithih branch.

Afterwards we visited his place and met with his wife and some other family members. The first time I was in Cambodia, I saw two elderly people in their 70s. Until that moment I had not realized there are hardly any people of that age as a result of the Khmer Rouge regime. About 2 million of the 7 million Cambodians (at that time) were killed by this regime. Almost a complete generation has disappeared… Quite a shocking realization. When we headed home with the car, I wonderied how the Cambodians could still be so tremendously generous and friendly…




















Mr. Nuon Mek together with his wife and 3 of his children with part of their rice.

We also met with Mrs. Khiev Orn, a 55-year-old woman who produces cashew together with her husband. For a year she has a 4 month loan from Seilanithih. Before she would finance everything from her own savings or borrow some money from her children that live in Phnom Penh. She has a loan of USD 1,200 to pay approximately 10 labourers during the harvest season to work on the 3 hectares of land. She also uses the loan for fertilizers. During the harvest season she and her husband sleep for 4 months in a hut in between the cashew trees to prevent the nuts being stolen. We also visited her house that was being rebuilt with concrete piles. When I asked Mrs. Khiev Orn who would live in the house while she and her husband were living in the hut, she explained that her children would live there.




















Mrs. Khiev Orn showing us her cashew trees.

An interesting detail she mentioned was that she would not immediately sell the cashew nuts but would wait until after the harvest season. Prices are higher outside the season and she would earn a higher income. Smart thinking, I thought. I was happy to have had the opportunity to meet this business woman on the other side of the world!

Liesbeth in the Philippines: project visit UMFI

On my next day in the Philippines Joyce, Andie and I fortunately left a bit later for the project visit, because we went to a nearby project partner in Manila, called Upland Marketing Foundation Inc. (UMFI). UMFI is a non-profit fair trade marketing institution for community based enterprises. UMFI is the marketing arm of 60 of these enterprises operating in 17 provinces across the Philippines. Products they market are among others coffee, Muscovado sugar, organic rice, jams, wine, vinegar, oil, honey, etc.















Photo: Staff representatives of UMFI and I in the warehouse in Manila

I visited the warehouse in Manila and met with the organization’s CEO Ruben Evangelista and Sales & Marketing Manager Mel Fonollera. In the warehouse the products are stored and sometimes even re-packaged (see photo) before distributed to the supermarkets in Manila where the products are sold.















Photo: UMFI employees sorting and re-packaging the rice in their warehouse.

It was very clear to me this organization has a strong social focus and is very committed to serving the communities they work with. This was also visible from the plans they have for the coming years. Beside stheir current products, they want to focus on cocosugar, dairy and other naturally processed fruits and vegetables. They stressed that they aim on these sectors because they want to support families in their major sources of income. UMFI also plans to develop new product lines (in cooperation with its R&D department) within value chains it is currently involved in. An example of this is Muscafe, which is an instant coffee product they produce. The sugar that is used in this coffee is based on the Muscovado sugar that UMFI already markets. Other plans for the future are related to working with export markets, and acquiring an organic certification. In the afternoon we went to a supermarket where the products of UMFI are sold. Here the CEO showed us how the products were displayed. He showed us a shelf which was almost empty, namely the one of the Muscovado sugar. Having a regular supply of sugar from their producers is very difficult and a challenge for the organization. As a result the sales fall behind, and profitability might be at risk.















Photo: CEO Mr. Ruben Evangelista in the supermarket where the UMFI products are sold.

Overall, it was interesting to see an organization at this point in the value chain and the important role they hold for the communities and families they support. However, it revealed also to me that it is quite difficult to be a marketing company with a social focus in the Philippine context and to do well at the same time. At around 5 o’clock we were back at the office and I left to my hotel, to prepare for the next two days in which I would provide training to my Philippino colleagues on how to write good project proposals. And as we say, good preparation is half the battle!

Liesbeth in the Philippines: project visit ASKI

My second day in the Philippines started quite early, especially since I was still slightly jet-lagged from my flight. My Philippino colleagues picked me up at the hotel at 6.30 in the morning to go to Oikocredit’s project partner Alalay sa Kaunlaran Sa Gitnang Luzon Inc. (ASKI). After a quick breakfast at the Philipino version of Delifrance we headed to Cabanatuan City, three hours drive North of Manila, where ASKI’s head office is located. During the trip, some of us were sleeping (but fortunately the driver was not) when we almost bumped into a bus. They say traffic is bad in Manila, and apparently in rural areas it can also be quite dangerous. When we arrived at the head office, we were briefly introduced to some ASKI staff. We were supposed to have a longer meeting after we went for a visit to a group ASKI works with in the province Nueva Ecija. After being on the road for another hour, the ASKI staff explained with enthusiasm what their organization is about. Not only are they focused on microfinance but they also have many social development activities. As we say, they offer microfinance plus-plus!

The ASKI group we visited started in 2005 and began with a strong focus on social development. Since 2006 an agricultural loan group was started and we met 10 members of this group (see photo).















Photo: Members of the agri-loan group of ASKI in Nueva Ecija

Paula Patoc
Paula Patoc is a lady who looks very young but told me that she already has a few grandchildren. Paula Patoc has been a client of ASKI for 12 years through its individual lending program. She has several very small businesses: a mini-gasoline station, prepaid phonecards distribution, beauty products (I wondered if that would be her beauty secret…), a water filling station and a mini-pharmacy. Now she has a six month loan of PHP 25,000 (EUR 433) which she uses for all her businesses.

Furthermore, she has a housing loan for home improvement of the same amount. Her husband is part of a group lending scheme. Paula is a community organizer who tries (together with the help of ASKI) to organize the community to get things done by the local government and solve the problems they have. They have pushed for water projects, toilets, a day care center, among other community development projects. It showed me that ASKI does not only provide access to financial services, but empowers its clients to stand up for themselves and lobby with the local government to solve their issues. I also found it interesting to see the difference between men and women in this respect. The men of the community were focused on getting the local government involved in an electricity project whereas the women had a strong lobby for a toilet project to help poor families get proper toilet facilities.















Photo: Paula Patoc in her house in front of her mini-pharmacy.

Edgar
Another member of the group was Edgar, a rice farmer who already has his 11th loan with ASKI. When he started borrowing from ASKI he received a loan of only PHP 7,000 (EUR 118) and now he has a loan of PHP 45,000 (EUR 757). Edgar also saves with ASKI and part of this money he uses to pay off his loans. When I asked why he was with ASKI for so long he mentioned that ASKI has the lowest interest rate as other financing options would cost him 8 – 10% per month. He is using the loan for labour, inputs, etc for his rice production. He tried to produce in an organic way, but explained that it is difficult in this area, because it is mainly rain-fed rice production. As a result, weeds grow easily and it is very labour intensive to continuously weed the land. It would make organic production possible if they could have an irrigation facility, but it’s hard to get a group loan for that since some of the members of the group have land too far from the pump to make proper use of it. Luckily for me, Edgar’s plot of land was not far from where we met. Therefore he took me in his tricycle (see picture) to his land. Not completely fit for a tall European woman like me, but being a real Ugandan boda-boda fan, I really enjoyed the ride!

His rice field was not yet prepared for planting, but he hoped it would look like the neighbouring plots in a short time. He even offered me a hectare of land. I expected his sentence would continue with “if you marry my eldest son…” but he did not refer to anything like that. He just preferred hard dollars or euros for his plot. That sounds like an economist, which of course I liked!















Photo: Local transport in the Philippines

Later went back to the ASKI head office and met with the Executive Director (Mr. Rolando Victoria), the Director for ASKI Foundation (Ms Babylyn Dela Cruz) and the Director for Resource Mobilization (Ms Zoraida Libunao) who explained about the current positive developments in ASKI and their major difficulties. One of their problems is the PAR (portfolio at risk) level which is currently quite high. They have a lot of their loans in agriculture which is always a risky business, but especially in a typhoon prone country like the Philippines. Even though part of these loans have crop insurance it is difficult to get this because the insurance companies do not always pay out. On the other hand it strikes me that this organization wants to keep its focus on agriculture and is thinking about new products (value chain financing) and works together with e.g. Philrice, an institute for rice research.