Credit Unions Rebuild Trust in Rural Cambodia
(l-r) Hihm Sarik, credit union president; Meas Thon, CCSF operation department manager; Brian Branch, WOCCU chief operating officer and Peter Mason, CUFA executive officer.
Madison, WI—An assessment team led by
World Council of Credit Unions chief operating
officer Brian Branch and Credit Union Foundation
(CUFA) executive officer Peter Mason recently
spent 10 days in Cambodia to explore avenues for
supporting credit union development.
Civil war destroyed Cambodia's financial
cooperatives in the 1970s. The brutal Khmer
Rouge regime abolished the use of money during
its rule, effectively wiping out the financial
sector. Local families dependent on harvesting
rice needed loans for food during the seasons
between harvests. As a result, families resorted
to using money lenders, who charged as high as
180% interest per year, driving many families
Since 1998, a community reconstruction
organized by CARE Australia, CUFA and the
Canadian Co-operative Association (CCA) has re-
introduced the credit union concept in the
Battambang province of northwest Cambodia.
In a country torn apart by decades of civil
and repeated bank failures, communities have
embraced the cooperative model as a foundation
for financial institutions they could trust in
again. Credit unions provide affordable micro-
credit loans and encourage savings. The adoption
of the credit union model has fostered community
ownership, pride and active involvement of
credit union management.
"Credit unions are re-establishing the community
value of trust today in Cambodia," Branch
explained. "People began depositing just a small
part of their savings, testing withdrawals to
see if they could get their money back, and then
increased their savings over time."
In Cambodia, where average life expectancy is
years, loan and life saving insurance have also
become important products the credit unions
offer to simultaneously provide families
protection and boost their confidence in the
According to CCA research, households are
vulnerable to food shortages, children are able
to remain in school and families are able to
accumulate modest wealth with access to
affordable financial services through credit
union membership. Thanks to their credit unions,
families have been able to acquire agricultural
tools, carts, storage facilities, wells, water
tanks, hand tractors, pumps, sprayers,
threshers, ploughs, harrows, livestock, fruit
trees, chickens, ducks, pigs and water
With small savings and loans, many members
expanded production beyond simple subsistence
rice farming to engage in agricultural cash crop
production and small-scale entrepreneurial
production outside the agricultural sector.
Credit unions have had an impact on local
markets as well. Credit union members explained
to Mason and Branch that prior to the presence
of credit unions, villagers were only able to
access loans from their wealthy neighbors or
from moneylenders who lent at 10% per month.
Today, credit union members borrow at much lower
rates—3% per month from their credit
union. And in villages with a credit union,
competition has forced moneylenders to lower
their interest rates to 4%, so even non-members
benefit from the existence of a credit union.
World Council's next steps in Cambodia will
include assisting credit unions with
constructing adequate facilities for their
The Cambodian Community Savings Federation,
formed with support from CARE Australia less
than 10 years ago, serves as a league for 36
community credit unions. The affiliated
community credit unions operate in 85 villages
and serve 25,220 members. The largest credit
union has 1,800 members, who are largely rural
agricultural producers, self employed and
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 51,000 credit unions in 100 countries serve 196 million people. Learn more about World Council's impact around the world at www.woccu.org.