An NGO project providing small loans to help the poor establish private enterprises made the official transition on Friday to a private microfinance institute.
Licensed by the National Bank of Cambodia, VisionFund—owned by the NGO World Vision—received official sanction from the bank to expand and reach a larger clientele, said Rommel Caringal, World Vision Micro-Enterprise Development program manager.
VisionFund provides loans for Cambodians who are already able to feed themselves and have a business strategy but lack the resources to get started, said Talmage Payne, World Vision country director. “We have far more clients today than we can deal with,” he said.
Although VisionFund was officially launched Friday, it has been functioning as a limited liability company since November 2003 and was licensed this May, Caringal said. It has 19,000 clients who have been loaned a total of over $1.3 million. By December 2005, VisionFund hopes to loan a total of $2.2 million to 25,000 clients, Caringal said.
The loans range between $20 and $200 and are granted to each member of the group who applies. On average, a person is loaned $80, which he or she then repays over six months, Payne said. Loans are repaid at between
3.5 and 4 percent interest.
Caringal said he hopes the scheme will help people avoid becoming heavily indebted to traditional moneylenders, who ask for 10 to 30 percent in interest.
Groups are targeted for VisionFund loans “to help strengthen the backbone of trust and community,” he said. However, individuals will be able to apply for loans in the future, he added.
The loans are intended to help people get started in professions such as jar making, pig raising and silk weaving that are usually household based.
They are noncollateral and will not take property from clients unable to repay them, Caringal said. However, repayment success rate is currently over 99 percent, he added.
“One of the biggest incentives [to repay] is the availability of subsequent loans,” Payne said.
Loans have been provided to people at the municipal dump in Stung Meanchey district to give them an alternative to making a living collecting rubbish.
In 2000, Sim Sopha, 47, a mother of five, borrowed $250 from VisionFund to subsidize her initial capital of $2,000 and establish a small candle-making business. Standing next to eight candle-making machines at her home in Stung Meanchey district Friday, she said she produces 3 tons of candles a month and earns a monthly salary of $210.
VisionFund is also operating in Kandal, Takeo, Kompong Speu, Kompong Chhnang, Battambang and Kompong Thom provinces and plans to start operating in Preah Vihear province within a week, Caringal said. Funding is provided by Australia, World Vision and VisionFund International, he said.