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Banking on the Poor - Cambodia Feasibility Study Report
This report is the outcome of a feasibility study undertaken in rural Cambodia with two aims: to gain an understanding of rural economic conditions in order to assess the demand that exists for a selfhelp group (SHG . a small group formed primarily for the purpose of jointly mobilizing savings and using this capital to provide credit to group members) initiative, and to consider the issues that would be likely to arise during implementation of such an initiative through local partners. The study relied upon a number of qualitative approaches to data collection, including semistructured interviews with groups - both SHGs and others - and individuals and participatory group activities with focus groups discussions. The data represents the experiences of some 40 different groups from 20 communities in 7 provinces.
SHGs are working relatively well in the Cambodian context and are useful in helping people meet their needs. However, providing a mechanism for access to capital does not necessarily challenge existing social and political structures, and any household economic problems stemming from these structures are likely to persist. Like all loans, SHG loans have the potential to indebt. Lower cost of capital can help reduce poverty, but it is not the only solution and should therefore not carry with it unrealistic expectations. At the same time, SHGs may provide needed capital to respond to economic opportunities, and SHGs have a unique potential to function as a social safety net and reduce vulnerability by reducing the cost of capital that villagers need to borrow to respond to their urgent needs. A SHG initiative with well-selected partner organizations that deliver complementary services that enhance the effectiveness of financial services, such as initiatives aimed at improving economic productivity in sectors relevant to the rural economy, would be likely to have a greater impact on poverty in Cambodia.