7/30/2019 ICS Factfolder Multi Porpose Bank Cambodia

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7/30/2019 ICS Factfolder Multi Porpose Bank Cambodia

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ICS (Investing in Children and their Societies) strives towardsa better future for children inrural Africa and Asia. Through itsprojects and programs, it builds

on a sustainable growth in welfare and wellbeing

by simultaneously investing in economic and social opportunities and needs. The central building blocksof the work of ICS are social business, child protectionand skillful parenting.

The issue of farmers northern Cambodia

In northern Cambodia, rice farming is the main source

of livelihood for most households. However, most

smallholder farmers are unable to sufficiently meet their

basic household needs. The way rice farming is currently

practiced brings them rather low returns in comparison

to their expenses. Productivity is often poor, as well as

the farmers market position. Household income and

food availability are insufficient for most farmers to meet

their families’ basic needs throughout the year.

Compounding the issue, farmers face high costs in order

to produce their rice. Money is spent on buying seeds

and fertilizer, renting tools and equipment for plowingand threshing, and sometimes laborers need to be hired

to work on the land.

Private money lenders charge high interest rates, going

beyond thirty or even up to fifty percent. Another issue

contributing to vulnerability of the farmers is their

inability to sell produce at a reasonable price. Individual

farmers lack direct connections with large buyers such

as rice millers. Middlemen, often contracted by these

millers, come to the village to buy rice from the farmers,

exploiting their lack of bargaining power and market

information.

Multi Purpose Banks

Since 2004 ICS has supported villages with the

establishment of rice banks in order to address food

shortages in the time before harvesting. By providingmaterials for construction, as well as an initial amountof rice as starting capital, rice banks were established in

nine villages throughout Oddar Meanchey. This enabled

households and farmers to borrow rice seeds for direct

consumption or farming purposes, allowing repayment

in kind after harvesting. While ICS only provided the

starting capital and some occasional monitoring and

coaching, the implementation of the rice banks activities

has been fully managed by local community members

themselves.

Rice Banks 

A few years after the last investments, two out of the

nine rice banks supported by ICS have proven profitable.

A 2010 audit report showed that these two rice banks

(based in the villages of Pou Thmei and Prasat L beuk)

were able to expand their revolving capital over 25

percent, while still providing households with rice loans

at affordable rates. Besides increasing their capital, they

were able to use the interest to address several social

issues in their communities. The areas of investment

were chosen through democratic principles. Examples of investment include the salary of a kindergarten teacher,video equipment to capture village events on camera,

and a clean drinking water supply (the start of Hydrics

company). While other rice banks have experienced

various difficulties and sometimes even saw their capital

bases shrinking, these two rice banks were able to

expand their services to three other villages, together

serving a total of approximately 500 households.

Stimulated by these positive outcomes, a series of 

meetings with village authorities, teachers, rice bank

committees, the commune council and community

representatives have resulted in ideas to expand

the range of products and services offered by the

rice bank. It was also decided to provide these

services in a larger number of villages. This will not

only provide more people with access to affordable

credit services (reducing their dependency on

private money lenders), but also increase the

profitability of the rice banks, allowing them to sustain

their activities and make more social investments in their

communities.

Cash loans 

Current practices have led to the decision to expand

the rice banks’ services beyond rice loans. When people

now need cash for investments in their (farm or non-

farm) business, they lend rice, sell it to middlemen and

invest the returns. However, because of poor marketing

these returns are far from optimal, with a large share

of profits remaining with the middlemen. To prevent

such practices and still meet the need of cash loans, the

two rice banks have decided to provide such services

themselves. At the same time, they will attempt toreduce the costs and increase the uptake of quality farminputs by offering them at lower prices than individual

farmers can currently negotiate.

Conclusion: thanks to the Multi Purpose Banks, the

farmers meet their and their families basic needs. For

example education for their children and enough food

throughout the year.

CAMBODIA - MULTI PURPOSE BANK PROJECT

'While ICS only provided the starting capital 

and some occasional monitoring and coaching,

the implementation of the rice banks activities has been fully managed by 

local community members 

themselves.' 

ICS-factfolder-Multi Porpose Bank-DEF.indd 3-4 14-03-13 18:05