Village’s savings group keeps livelihoods afloat

Saving group members come to deposit money at a monthly meeting. (Photo: UNDP Cambodia)

Koh Kong – Fisherman Srun Bun Thuon saw his family’s life hopelessly crumble seven years ago when the fisherman had to sell off his house to repay a microfinance debt.

“Even our daughter’s earrings were not spared. I took them off her ears to sell to pay off the debt,” the fisherman’s wife, Nhek Sophy, said, recalling the family’s misfortune in 2007.


  • 23,750-ha of mangrove in Peam Krosorp protected area have been preserved
  • Saving group members in Boeung Kachhang village and Koh Salav villages have increased to 184 members.
  • 10 million riels or US$2,500 is signed out in loans every month

During the past six years, the couple has managed to get back on their feet, making a living from fishing crab with loans from their village’s savings fund.

In Boeung Kachhang, a tiny island tucked in the mangroves in Koh Kong province in the southwestern coast of Cambodia, the fund offers the villagers a lifeline to stay afloat. When banking services are out of reach, the villagers, bound by mutual trust, are pooling money to use for small business or in emergency.  

The savings group is an off-spring in a broader climate change adaptation project funded by Sweden and Australia. The project jointly overseen by United Nations Development Programme and GEF Small Grants Programme helps to preserve a swath of mangroves linked to the 23,750-ha Peam Krosorp protected area, about an hour ride by boat from the provincial town.

“These mangroves work as a natural buffer to protect villages against storm and coastal erosion in addition to providing habitat for many marine species,” Hun Marady, the provincial chief for department of environment, explained. He added: “They are also the resource the locals depend on for survival.”

The mangroves used to suffer a lot of destruction from villagers felling them down to feed charcoal kilns and make way for shrimp farming. To reverse the trend authorities began engaging the villagers in the conservation and creating a savings group in the village to offer them loans as an alternative to charcoal business.

“If the people go to borrow from outside, the money will flow out of the village by way of repaying the loan and interest. On the contrary, our savings group keeps the money moving right here the village,” said Lorn Rith, head of the conservation committee in Boeung Kachhang village where the savings group has 141 members. The neighboring Koh Sralao village has two savings groups with 44 members.

Koh Kong girl collecting moneySaving group accountant goes around the village by her bicycle to collect deposit from group members. (Photo: UNDP Cambodia)

Lorn Rith said 10 million riel (US$2,500) is signed out in loans every month. The amounts range from US$250 to US$2,000 per client at 2 percent interest per month compared to 2.7 percent levied by microfinance firms.

The clients voluntarily decide how much money in a day to put in the village’s savings. A book-keeper goes door to door to collect the contributions. Once a month the group meets to certify the record, process new loans and repayments, and tally the balance sheet. At year’s end, the accumulating interests are calculated and divided up among the members to put back into their pockets.

“It is more convenient to take loan from the community savings, and the benefits just go back to the community,” said Phoeung Phieng, a 58-year-old mother.

On a recent February day, she came to the community centre to pay an installment for a loan she had taken to buy a motorboat for her son to transport goods and passengers. Out of US$61.25 due from her, she was able to pay only US$12.5 and US$10 interest. She said the boat taxi business only broke even the previous month so she asked to defer full installment to a later date. Such deferment is permitted under the group’s regulations to allow borrowers time to cough up enough money to pay back.

“With lenders from outside, installment must be made in the exact amount due and on time,” she said, adding that borrowers get penalties when they fail to meet the requirements.

It happened to Srun Bun Thuon, the fisherman. Overdue installment, interest and penalties kept piling up and his lender was about to forfeit his house. He sold it to repay the debt and, with his wife, later disappeared from the village much out of shame before their neighbors.

After eking out a living as construction workers in Phnom Penh for one year, he returned to the village and borrowed money from the savings group to restart his crab-fishing business. Through six years of hard work, he has built a new wooden house. A motorbike and a motorboat are the latest additions to his family’s assets.

“We get our lives back thanks to the help of the community’s savings group,” he said.