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Chapter 8
(a) SWOT Analysis
The
framework of SWOT analysis is useful to summarize the status of PRASAC credit
programme in Prey Veng. SWOT analysis examines the strengths, weaknesses,
opportunities and threats of the programme. This has been done through group
discussion with SCA committee members and with key informant interview.
Application of this analytical tool to PRASAC credit in Prey Veng results in the
following profile.
Strengths
Financial performance of PRASAC credit in Prey Veng has been considered
as good in term of repayment rate. The loan repayment has been 100% since the
early of programme implementation in late 1995. The achievement can be traced to
(1) close cooperation with local authorities where it concerns bringing
procedures against defaulters, (2) strong requirement of repayment, (3) strong
commitment of the credit staff with regular support from the credit specialist,
(4) good structure of the programme with the effect of social collateral means.
The local credit staff was able to carry out daily credit operations at
the field level. In this sense, it may be concluded that the first stage of the
constitution of a strong staff has been achieved, since they were seconded from
the governmental agencies without any experiences on the credit operation.
PRASAC credit in Prey Veng has established a track record of 93 Credit
and Savings Associations to more than 5,888 members and 807 liable groups of the
farmers with very small or null arrears of the matured loans and interest. The
capital in SCA has increased to 232,153,200 riels as of December of 1998.
Financial trend is positive in this province if compared to the other
provinces where PRASAC are implementing the same credit programme. As at
December 1998, the loans portfolio exceed 32,986,765 Riels for the micro loan
and operating efficiency of lending activities is almost completed in five
districts where the programme has implemented its credit activities.
The
operational administrative cost is cheap, 0.053 for every dollar of loan
outstanding. This cost was calculated without including the cost of expatriates
and the cost of funds.
The performance of 12 Credit and Savings Association has been classified
in the category number 1, 74 number 2 and only 7 SCAs in number 3. The category
number 1 are expected to be self-autonomous, number 2 are expected to be ready
for shelf autonomous and number 3 are still depend on a strong support from the
credit agents.
PRASAC credit programme in Prey Veng has strong effects on the activities
of usurers. Many of them have lowered their interest rate and some have given
their lending activities in the areas where PRASAC credit programme are
operating.
The programme brought both social and economic change. The secondary
occupation has dramatically increased because of the programme. The member
changes their attitude to be busier with income generating activities in order
to generate additional incomes to repay the loan and eventually to improve
living conditions.
Weaknesses
The local staff still lacks of necessary managerial skills to develop
credit policies and still lack of monitoring and follow up the use of loan by
the members. The effectiveness and efficiency of the local credit staff in their
dealing with the credit programme required continue to develop a capacity
building in order to strengthen the human resources development.
The provincial staff still has low knowledge of the Management
Information Systems by using Micro-banker system. The operation is still
required the support from the credit assistant at PMU. There is lack of
communication between and within different levels of structure of credit
operation village-district-province and the Project Management Unit based in
Phnom Penh.
Lack of staff performance assessments and motivations. The motivation of
the staff is important factor effect to the improvement quality of staff
performance, otherwise the staff will not focus seriously on their daily work.
Some of the field staff do not works close to the credit members just work with
only the credit committee members.
The programme lack of basis guideline regarding (a) basis to decide the
amount of loan, (b) criteria in selecting credit committee members and its
mandate and (d) deviation in using loan.
Lack of qualitative monitoring and the follow up of the loan use. This
lead to the member not proper use of loan and the committee leaders with
majority are men dominated to the management of SCA.
Savings are the main component of the credit programme in order to
sustain the programme and the main factor for the strengthening solidarity among
the groups and members, but PRASAC does not include savings component in the
credit programme. The term members’ fees contribution can be confused to the
members as a condition to get the loans.
The SCACM is lacking of knowledge in credit management. There have a
problem in the utilization of internal fund. The group leaders not proper use of
loan and sometime not provided properly to the members. In addition, the SCAM
remain long time in their position.
Opportunities
Demand
for credit and savings services in the rural area is substantial among
low-income rural people but remains largely unsatisfied. The demand for credit
in the rural area is high, it is estimated that as of January 1997, credit
operators reached only around 12% of the total households (CRS, 1998).
As the reputation of PRSAC Credit Programme is high, it has the
opportunity to serve as model in delivering credit and savings services to
low-income people, especially those in the rural areas.
There is a vast number of young staff and the staff whose willing to get
to know more about the management of the credit programme. Based on the
experiences of the last four years, it is good opportunity to strengthen the
capacity building and human development to the credit staff.
The rural farmers are willing to be strongly participated in the
development process in their community, although they have a lack of knowledge.
It is a new for the rural members to participate in such a development programme.
Threats
The main threats are the Natural disasters that effect on the rural
activities. The majority of loans were invested for agricultural production, so
the main factors to achieve this programme is enough water supply.
The future of the credit programme remained unclear: (1) the ownership of
credit funds and assets currently in use by the credit component (2) project is
unclear in the implementation with the Cambodian government agencies, therefore
the status of the staff seconded from the government agencies should be modified
in the future.
Lack of relevant laws and guidelines for micro-finance
Lack of training programme and exposure visit providing for the field
staff
Government intervention that would introduce critical limitation
Local
insecurity that hampers people’s productive activity
(b) Further Elaboration of Some
Issues
Credit is the major components for the rural development, and it is the
main tools for poverty alleviation if it applies in the rights tract, in the
sense that credit policy and principle considered carefully to the benefits of
the poor farmers. However, if the
credit applies in the wrong tract it will lead to perceive as an overwhelming
“ debt-burden” to the poor people. How can we implement credit in the right
way?. In the planning design, we have to considered and put the ideas of the
stakeholders in to account. The credit policy and principle have to put in place
with the people centered, it means here to the best serve to the poor farmers.
The main factors to be successful in implementation rural credit are:
(1) The capability of the field staff related to the managerial skills is a crucial factor for the management and the achievement of the credit programme. PRASAC has seconded the staff from MAFF and MRD, which they do not have any experiences in credit management, the programme was not running smoothly due to policy and principle have changed several times. The programme is in the learning process, which was in the planning design lack of participation and with a short-time, this lead to plan in trial and error which spend a lot of money in order to find the good way. However, if the programme can not find the good way the large capital will sunk.
(2)
Saving is the main
components to sustain the credit programme and to make more participation from
the members. PRASAC dare not to introduce savings component in the credit
programme, but they incorporate the member fees’ contribution instead, because
they thought that the capacity of the field stay is still young can not mange
the savings. The programme will not reach self – sustained because the members
of SCA thought that the contribution fee just only condition for them to get the
loan from PRASAC. After the long time implement the credit in the village, the
members were complained to stop the programme and then they will share to the
member of the internal funds.
(3)
The closed cooperation with local authorities in the implementation of
the credit programme also is the main factor contribution to the success of the
credit programme. The field staff was cooperated with local authorities in
selecting the members and gets to know more about the status of the members in
the area because they know their situation and their people. However, the local
authorities should not use the benefit of the credit for their own purposes and
not so deep interfere in the programme. The local authorities just aware of the
programme and support as can as possible. In the contrast, if the local
authorities interfere more in the programme will lead to not successful in it
achievement.
(4)
Social collateral is the main factor to put trust among the members,
PRASAC has use the liability group in order to guarantee of the members in the
group and with the groups can form an association. The structure of the
programme can improve solidarity of local community, encourage them to exercise
their rights such as election their representative, and elect the representative
of the nation. The meeting or general assemble is a time for the members speak
out and express their ideas in contributing to the development of their
community. However, in the meeting the facilitator is needed to support them in
discussion.
Agricultural credit is very risky because the main agriculture is based only on rainfall. The last few years, there was a large of deforestation, which was adverse impact on the weather. Droughts and floods always occurred, the members who invest money on rice cultivation when they faced with the natural disaster, always loss the money. If the member does not use loan with benefit, they have to borrow from the other sources, friend, family member, middlemen to pay for PRASAC. In this case the credit will not help the people but in contrast will push the people into poverty.
The
PRASAC field staff working more closely with the Savings and Credit Association
Committee members, president, accountant, treasurer, without closely with the
groups and members. The field staff was lack of information about the
difficulties of the members and lack of follow up of the loan use. Since the
capacity of the credit committee members is still very low in managing SCA,
there is a need of strong support from the credit agents to SCAC. In order to
improve the PRASAC credit programme to be more effective and best service to the
poor people in Cambodia, the author would like to make a consideration and
recommendations for the improvement of PRASAC credit programme as the following:
(1)
PRASAC should change the organizational structure management of the
credit at the village level, the credit agent should work not only directly with
SCAC but also working directly with the group leaders and eventually with the
members (Figure 8.1). The monitoring of the credit agents to the SCAs not just
only checking accountant book but the credit agents should look carefully on the
follow up of the loan use, explain to the members about the benefit of the
credit programme and how it works toward self-reliance for their community. The
understanding of the members on the concept programme is one of the main factors
to motivate them fully participates in the programme.
(2)
After about five years experience in rural credit management, PRASAC
should considered introducing savings component with credit by just only change
the term membership fees to savings. The first savings should be introduced with
SCA category number one and latter on to category number two. The inclusion of a
savings component is aimed at fulfilling three objectives. The first is to
assist the viability of the system by the more rapid accumulation of capital.
The second is the provision of vested interest in institution and partial
guarantee of loan repayment on the part of borrower. The third is to provide the
rural population with dual benefits of secure of depositor for their savings and
local community with resources for its development and investment needs. The
savings policy such as interest on savings, the withdrawal of savings fund,
resigns from the member, this will define latter by the agreement and discussion
with the members.
(3)
PRASAC should strengthen the existing SCAs and should focus more on human
resource training and development. In terms of human resource training and
development, PRASAC should come up with a progressive training programme design.
Initially, the topics are concepts on rural development, area needs assessments,
programme management (objective setting, identifying performance indicator and
monitoring and evaluation) and financial management. Specially, PRASAC should
also be trained on business development planning. The study tour should be
conducted every year in order to learn the experience from credit operators
either in the country or in the developing countries.
(4)
The credit officers or policy makers should carefully consider on the
utilization and management of internal funds because the imbalance of internal
fund utilization will lead to destroy the sustainability of the programme at the
local community. PRASAC should help and facilitate to SCA how it could be use
effective. This is the main role of the whole members to decide at the general
assembly meeting, however, without the intervention and assistant from the field
staff, the sharing of the internal fund will not balance and eventually will
break down the whole SCA. The ownership of internal fund should be clear to all
the members that are to use to building sustainability at the village level.
(5)
Criteria of selecting the beneficiaries should be clear defined by PRASAC,
otherwise the programme will not reach to the poor people. For the poorest
people who reject by the liability group, credit agent and SCAC should encourage
them to join by collecting them into one group, which they are able to guarantee
among them and try to provide a small amount of loan at the beginning. The field
survey found that due to the social value the poor people are more aware of the
repayment and use the loan very carefully; the poor always pay money on time
then the moderate and better off.
(6)
PRASAC should come up with a
clear policy on its implementation with the government and the ownership of
credit fund and assets. PRASAC should have a clear contract for staff seconded
from the government agencies, whether s/he willing to work with PRASAC or
government and how long. Because credit not like the other projects that could
stop in a short period will take long time to continue and build up the
community. The staff performance assessment should be conducted at least tow
times a year in order to assess the performance of the staff and identify the
training needs for the staff. The award policy should be existing to the staff
who has good performance.
(7)
The credit staff should be critically for the loan application from the
members. In one cycle the members not necessary needs the same amount loan. The
credit agents should assess carefully of the status of the members before
providing loan in order to help them to use loan in the proper way and effective. The loan mount requested by the members should reasonable to
the size of their business, avoiding using the loan for consumption purpose and
using the loan to repay for the middlemen.
This
study explored the general situation of the rural credit programme under PRASAC
credit programme in Prey Veng province, and identifies several problem areas.
However, the following specific topic are strongly recommended for further
research, which will serve further planning for successful implementation in
rural credit and eventually will be best service to the poor people:
(1)
A study of interrelationship management of the group loan and individual
loan and its impact to sustainable to the institution and to the rural
development.
(2)
Study more about the conflict management at Credit and Savings
Association level and find the solution of the good management, which will lead
to be self-management and self-reliance at the community level.
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