Every month in the middle of a Cambodian lake, a group of women gathers to talk about money.
These women live in Acol, a 32-family floating village located a half-hour’s boat ride from the shore of Tonle Sap Lake. As you might expect, their entire lives revolve around the fish swimming beneath their houses. CI’s new savings group is helping to ensure that these families can maintain their incomes whether or not fish remain abundant.
For centuries, people have built their houses on Tonle Sap Lake in order to have easy access to its massive freshwater fishery, which is one of the world’s largest.
Families here tend to have larger incomes than those on land, but their homes — made buoyant by plastic barrels and rafts of bamboo — require much more upkeep than terrestrial houses. And thanks to a number of threats to the fishery, including a growing human population, destruction of flooded forest that serves as a critical fish breeding area, and continued use of illegal, unsustainable fishing methods, catching enough fish to survive is by no means a certainty.
Sophy is among those who have lived their whole lives on the lake. Several years ago, her husband, Mao, got sick, and she took out a bank loan to pay his medical bills. He recovered, but the loan’s high interest rate quickly drove her family into debt. Soon they owed the bank about 2 million riel (US$ 500), a huge sum that prevented them from paying school fees for their five children.
Sophy’s story is not unique; in fact, about 95% of families living on the lake are in debt. CI’s savings group aims to change that.
Every month, each of the group’s 14 members — including Sophy — contributes 10,000 riels (about US$ 2.50) into a pool of money. Members can request loans from this pool of savings at a low interest rate (3%, as opposed to bank interest rates of 10% or higher). Approval of a loan requires a unanimous vote among the group members. Instead of signatures, the women make the loans official by stamping their thumbprints on the documents. All the interest accumulated will go back into the pool.
There’s one important rule: the loans members receive are intended to support small business ventures that will allow their families to become more self-sufficient. For example, a member could receive a loan to buy materials to make fish paste (a popular product sold throughout Cambodia and Vietnam), but not to fix the roof on a house.
This sort of savings group is not a new concept; indeed, other NGOs have tried it with varying degrees of success. In general, research indicates that people are more likely to be committed to projects when they have a financial stake in them. When funding is provided by outside sources, such as NGOs, some people may view it more as a “handout” rather than an investment in their future. Therefore, community financial investment in the project is key.
So how does any of this relate to conservation? The idea is that as families attain more stable incomes through these business ventures, they will be less likely to engage in unsustainable activities like fishing in off-limits areas and collecting large amounts of fuelwood in order to make ends meet.
Still in its early stages, the savings group in Acol has yet to prove its success, yet Sophy is optimistic. She has already contributed several thousand riel into the group’s funds. In only a few short months, Sophy has gone from borrowing money to loaning it — surely a sign that things are off to a good start.
Molly Bergen is the senior managing editor of Human Nature. This project has been made possible through a sub-contract from FINTRAC, as part of the USAID HARVEST grant.