More Trust building: An Example of Ratanak Samaki Saving Association in Kampot
The above mentioned saving association was founded by 6 founding members, of whom 2 were women. The saving capital was 10.000 Riel or 2.5 USD per month. It was founded on 30 December, 2005. The chairman is Mr. Uon Sophal. Currently, the association has its members increased to 188, including 118 women. The saving capital has increased from 60,000 Riel at the beginning to 164 million Riel (one million Riel equals to 250 USD) as of early March 2011. The interest rate was 3% per month and now the members agreed to lower it down to 2.5% per month. Its members are mostly coming from the same village, but about 20-30 members are from other villages locating in the same commune. The interest rate is the same for members and non-members, but non-members need to pay service fee of 5,000 Riel every time they borrowed the money. The association is based in Khcheay-West village, Damnak Sokrom commune, Dorng Tong district, Kampot province.
When asked why the leaders of the association decided to lower the interest rate? The answers I got are as follows:
– repeated requests by members, so that it is easier for them to invest the borrowed money to make some returns
– the association would like to set as example for other credit institutions to follow
– the general trend of lower interest rate during the economic crisis and its economic impacts towards the local and antional economy
– other credit institutions began to lower their rate too
The association is governed 9 elected committee members (plus 2 village chiefs), including 6 women. In this case, it has more percentage of women than men in the steering committee. The mandate for committee members is 3 years. It is interesting to observe during our visit to the association on 2 March 2011. There were women there at work than their male counterpart. When asked why women at work are more effective than men? The answers we got are that:
– women are more organized than men, especially in dealing with money, in calculation and book-keeping
– women are more diligent
– women are using more soft communication tones and are better in dealing with conflicts
In order to keep committee members motivated at their work, the association collectively decided that 10% of the profit generated from the interest rate will be distributed as compensation for their work. All committee members have to work two times per month: on the 10th and the 31st. Usually, it would take one day to receive return money or provide credits to members. But, some time they do need to work for one more day to finalize their work. They eat lunch together and some time sleep together to protect the collected money
The compensation money generated is about 4 million Riel per annum or 1,000 USD. In average, each committee member might receive between 300,000 to 350,000 Riel for their collective work per year.
I recently interviewed Mr. Uon sophal, who is currently also President of Farmer and Nature Net (FNN), an umbrella organization of more than one thousand farmers associations and cooperatives; about the success factors of his saving association. He told me that it based on following factors:
- Good leadership
- Good understanding among committee members
- Good documentation system
- Clear saving and borrowing guidelines
- Trust of members towards leadership
- Good flow of information between committee members and members, especially during year-end general assembly
- Members got benefits from being member of association
- The association is registred at the commune authority and got full support from them
Mr. Uon Sophal mentioned also that mostly members borrowed the money from the association to purchase chicken, pig or cattle for raising, sending children to schools/faculties/universities in Phnom Penh, sending children to work abroad and/or for other urgent cases in their families.
In short, this example has shown that when collective actions bring real benefits to all members, more trust has been built. At the end the social and financial capital in the village/local communities will be strengthened and mobilized.