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VisionFund (Cambodia )

Microfinance, as a vehicle for serving the Poor in both urban and rural areas

Janeiro 2009

After two decades of civil war, Cambodia remains one of the poorest countries in the world with the average household of 4 earning less than 2 U.S. dollars a day. Today, Cambodia forges a new direction starting with little in terms of social, political, financial, and economic continuum. Microfinance was established as a vehicle for serving the Poor in both urban and rural areas whom otherwise would be disadvantaged or unable to access formal financial services.

VisionFund ( Cambodia ) plays an important role in this transformation process. With a mission of providing viable, integrated, market-inspired financial services to help the poor liberate themselves from poverty, the institution has been recognized with a CGAP financial transparency award in both 2006 and 2007. And recognized as the Centre of Excellence from VisionFund International with a global network in 47 countries. As of December 2008, VisionFund (Cambodia) services more than 79,000 clients in 73 districts spanning 13 provinces. Of the total clients, 80% are women. The institution focuses on improving the lives of Cambodia’s poorest and poor families. In addition to offering innovative financial products and services, we are committed to leading the industry in the following areas:

§ To remove barriers for HIV & AIDS affected families from access to economic opportunities with loans in partnership with KHANA;

§ To offer opportunities for vulnerable children to move from dump yard to school yards through loans for Child Labourer families ( in partnership with ILO );

§ To instill hopes and aspirations for next generation leaders through our annual children scholarships;

§ To provide role models to inspire future success with our Annual Best Client Awards;

§ To strengthen awareness and financial literacy one client at a time;

§ To Guarantee a safety net for financial peace of mind with Micro-insurance;

§ To build a culture of making our clients’ money work harder for them with savings mobilization;

§ To enable mobile phone banking for Sending, Saving, and Receiving money ( wherever and whenever ) with Wing.

Inspite of a global financial crisis, VisionFund Cambodia, in synergy with its network of partners, continues to enhance and transform lives. The institution proudly aligns itself with other socially driven partners including WORLD VISION CAMBODIA, ILO, PLAN, HAGAR, Cambodia Village Phone and Wing Cambodia.

 

 

VisionFund ( Cambodia ) evolved from a micro enterprise development ( MED ) program as part of World Vision in the 1990s into a leading microfinance institution in Cambodia.

In 2001, World Vision Cambodia began to streamline its micro-finance program by initiating a market based micro-finance project. Systems and procedures were overhauled and business processes and product evaluations were completed. Expansion into 12 ADP areas immediately followed in 2002. Solid performance continued with clients and portfolio growth remaining aggressive during 2003 and 2004. In compliance with local laws and World Vision Partnership standards for MED. VisionFund (Cambodia) registered as a separate commercial entity wholely-owned by World Vision Cambodia in November 2003 through the Ministry of Commerce via the Trade Registration Department. In 2004, VisionFund (Cambodia) secured an MFI license from the National Bank of Cambodia. Ownership was transferred from WVC to VisionFund International in 2005. By 2007, VisionFund (Cambodia) had secured a permanent MFI license from the National Bank of Cambodia.

When Cambodian law required corporations to have at least two or more owners, VisionFund (Cambodia) registered with the Ministry of Commerce, as owned by World Vision Cambodia and a Cambodian National staff of World Vision. In accordance with World Vision Partnership direction, the equity ownership of VisionFund (Cambodia) was transferred to VisionFund International (a micro-finance subsidiary of World Vision International) and World Vision International (WVI) in the second quarter of 2005.

June 2007 paved the road for significant organizational development and achievement with the receipt of a permanent license granted by the National Bank of Cambodia.

2007 also marked VisionFund ( Cambodia )’s first step into social investments outside of World Vision Cambodia. Plan International Cambodia and KHANA became the first two VisionFund (Cambodia)’s social partners. The partnership with KHANA makes VisionFund Cambodia the only MFI to provide financial services to people living with HIV/AIDS (PLHAs) and families of Orphan and Vulnerable Children (OVC). Since then, the company has added ILO, HAGAR, Cambodia Village Phone and Wing Cambodia to its growing list of socially-driven partners.

By offering low-cost financial services to the Poor, children can have more opportunities at education; their parents can earn more incomes from businesses invested with credit obtained from VisionFund ( Cambodia ); family health conditions can be improved as families can have access to better foods; and domestic violence can be minimized as women become more independent and gain “importance” in their family’s security.

VisionFund ( Cambodia ) naturally shares the values of a solidarity economy, a social enterprise combining both production and surplus allocation. The solidarity economic principles of respect for justice, co-responsibility, equality, transparency, decent work and dignity of labour, and brotherhood and sisterhood have long been integral to VisionFund ( Cambodia )’s institutional culture.

The institution is a production enterprise in that it provides the opportunity for self-employment to Cambodia’s Poor and Poorest and offers

the resources to control their work conditions and terms of his/her work. Clients are empowered to have dominion over their own future through micro loans to start their own businesses. As part of its “Better Future Project”, the institution aims to bring its “five finger” objective to the marketplace by 2015 which includes providing clients with access to information, market, “know-how”, finance, and technology to safely and effectively run their businesses.

Further, VisionFund ( Cambodia ) engages in Surplus allocation through solidarity investment programs. By pooling funds from donors and social investment initiatives from World Vision International, ILO, PLAN, Hagar, KHANA, Cambodia Village Phone and other socially driven stakeholders, the institution has positioned itself to become a leading socially driven microfinance institution.

Internal surveys show the number of children benefited by VisionFund ( Cambodia ) is 320,000 (average 4.00 per family).

Initiatives include:

· Sponsor best client’s children up to grade 12 with the average award of approximately $100 per year. Currently VisionFund (Cambodia) has sponsored 15 children;

· Provide loans to HIV/AIDs affected families. VisionFund (Cambodia) has provided loans to more than 100 HIV/AIDs affected families;

· VisionFund (Cambodia) Purchases micro-life insurance for its clients and promotes local employees. As of January 2009 there are over 37, 184 clients insured with micro-life insurance;

· Provide loans to 21 clients who are beneficiaries of International Labor Organization ( ILO );

· Actively Involved with plan, outcome, activities ILO as part of its decent work project;

· Recruit staff from the communities it serves, including those living with disability;

· Provide clients with access to information and technology such as Villiage Fone Operator and Wing mobile fone banking.

 

 

VisionFund (Cambodia) offers three loan products in 2009. Loans range from US$1 ( KHR 4,000 ) to US$5,000 ( KHR 20 millions ) at monthly interest rate between 2.0% and 3.5%, and terms from 3 to 24 months. Three lending methodologies are used: community bank, solidarity group, and individual lending, each consisting of three types of products—small business loan (SBL), agriculture loan (AL) and asset creation loan (ACL).

The loan products are distributed to clients through the client service officers who are based at the provincial and district level.

The institution also accepts deposits and savings starting as low as US$1 or KHR1,000 to US$25,000 or KHR100 million at annual interest rates of 2% to 10.50% including withholding tax of 4% to 14%. Saving products are distributed to the clients through both the client service officer who travels directly to meet the clients (door to door services) at the community and through field tellers (branch and service post office services).

In 2009, VisionFund Cambodia launched mobile phone banking to its clients making it the first MFI to offer cash remittent services wherever and whenever.

With over 75 years of combined experience in management, emergency relief, communications, sponsorship, human relations, and social development, treasury and financial management, auditing, organizational system development, current board of directors include prominent names from the development sectors

The main governing body is composed by World Vision and VisionFund International staff. Each board member works on a voluntary basis. The executive director of VisionFund (Cambodia) participates in board meetings but without voting right. The primary focus of the board is to balance between the social mission of VisionFund ( Cambodia ) as a micro-finance affiliate of World Vision and the sustainability and profitability of the MFI itself.

Additionally, VisionFund ( Cambodia ) and its 530+ staff take pride at having state-of-the-art performance management systems to respond to its business planning needs. Systems are regularly monitored to ensure optimum performance. For example, the institution’s emerge system provides up-to-the-minute details about clients, loan performance, at risk ratios, and other vital data that can be measured with accuracy and manipulated for financial and operational planning.

To speed up the decision making process, two committees, the Audit and Risk Committee and the Resource and Leadership committee meet 4-6 times per year. Each committee consists of staff members of VisionFund ( Cambodia ) to monitor and assess internal audit effectiveness and to follow up with external auditor’s recommendations.

Annually, the board performs self-assessment and assessment of the work of the Executive Director of VisionFund ( Cambodia ). Within the organization, an Executive Team meets once a week for the purpose of gathering top managers to discuss issues, policies, and strategies to optimize organizational day-to-day operation. A more operational Management Team, which includes provincial managers and department heads meet at least quarterly to receive feedback directly from the field. Finally, 13 other committees meet regularly to update company policies as needed.

Primary funding sources for the institution’s operation come from donor funding, commercial loans, and equity financing from World Vision International and VisionFund International. For fiscal year 2009, the institution has devised a sliding scale scenario to risk manage its operation taking into consideration the possibility of a worldwide volatile financial marketplace.

In recent years, VisionFund ( Cambodia ) has been recognized by the National Bank of Cambodia as a Social Performance Focus MFI. This is in addition to receiving financial transparency awards from CGAP ( The World Bank ). MicroFinanza Rating issued VisionFund ( Cambodia ) a rating grade of BBB+ to identify the institution as having more than adequate capacity to meet its financial obligations, and possessing strong and stable operations even if affected by major internal or external events. When coupled with its excellent infrastructure, standardized business processes and policies, financial and operational MIS the institution is positioned and able to capitalize on the increasing demands for micro-finance services.

Fontes :

From the Regional Workshop on Social Finance for SMEs with CSR Agenda held in Kuala Lumpur, Malaysia, from 10 to 13 March, 2009.

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