Excellent financial results and a strong social policy. At MFI (microfinancing institution) LOLC Cambodia, these two go hand in hand. With 200,000 borrowers and an average growth rate of 50% per year, the MFI is also receiving international praise for its social results. BRS Microfinance Coop is therefore investing EUR 1.4 million with great conviction in LOLC. Socheat Nop, head of the Social Performance Management (SPM) department, explains how the MFI stimulates and monitors the social impact of its activities.
“Will this benefit the customer? That is the guiding principle in everything we do. The customer always takes centre stage when we are developing a strategic vision, making operational decisions or creating financial products.
Our target audience is made up of low-income rural people. From the SPM team, we closely monitor whether we are actually reaching these people. We do this with the Progress out of Poverty Index (PPI): an instrument that measures the extent to which our customers are poor using ten standard questions. And which also checks whether our products meet their needs and improve the quality of their lives. The PPI confirms that the majority of our customers live in poverty or have a very low income. Moreover, three-quarters of them are women and half of them work in agriculture.
Because we work with vulnerable people, we pay extra attention to protecting our customers. For example, they can choose the most appropriate product from a wide range of products, with flexible reimbursement options. Each credit applicant is also visited by an employee. By monitoring living conditions and repayment capacity locally, we prevent people from accumulating too much debt. And we communicate clearly about prices, terms and conditions. In 2018, LOLC achieved CPP certification, demonstrating that we maintain high ethical standards and effectively protect our customers.
We also offer this protection by training our customers financially, in a group and on the radio. And we train our own employees from A to Z in the principles of SPM.
In addition, our MFI monitors the social impact of its loans and the effects on the environment. Anyone who uses children as workers or employs people illegally is not given credit. And we don’t give loans for activities that have a negative impact on the environment.
This social policy obviously benefits our customers in the first place. Phoun Kimsuor, for example, cultivates mint plants, together with his wife and sister-in-law. With a first group credit, they bought new plants, and with a second one, they installed an irrigation system. The sale of mint now gives the family a nice income. And Kimsuor’s dream of having his daughter study is within reach.
But LOLC also benefits from having the customer take centre stage. After all, satisfied customers stay with you and attract new ones too. In this way, as an MFI you can grow and work sustainably.
The investment of BRS Microfinance Coop also makes this growth possible: we can now grant a loan to more people. We are very happy about that! Especially because in BRS we find a like-minded partner who just like us attaches great importance to the social aspect of microfinancing.
I’m very proud to be part of this story. Together, we help people in poverty progress. And that makes me very happy.”