Pact Partner NGO Credit Research Project

Research conducted by Karen Rasmussen
with the assistance of Um Samav, from February to June, 2000


As part of the requirements for completing my M.A. degree in International Studies from the University of Oregon, I was required to participate in an internship with an organization working within my field of research. My particular field of research is micro-credit programs being conducted in Cambodia, with a specific focus on qualitative aspects of these programs. I am also very interested in how Cambodian NGOs (CNGOs) are conducting credit programs, and in comparing different methodologies of credit. As Pact has several partner CNGOs that have credit programs, I approached Pact Cambodia in July 1999 to see if my interests could benefit Pact in any way.

As a result, Pact Cambodia agreed to assist me in conducting research on five of its partner NGOs that are conducting credit programs. These NGOs are Urban Sector Group (Phnom Penh), Kratie Women’s Welfare Association (Kratie), Minority Organization for Development of the Economy (Kompong Thom), Kasikor Thmey (Kompong Cham), and Buddhism for Development (Battambang). I began my research in February and finished at the end of May, 2000. I was assisted in all of my research outside of Phnom Penh by Um Samav, a project coordinator for the CNGO Ponlok. Samav assisted me with translation, data collection, village mapping, and general facilitation of our stays in the villages.

As I wanted to be able to absorb as much qualitative information as possible from the credit programs operating in villages, I wanted Samav and I to be able to stay in one or two villages in each province we worked in. We were able to do this in only a few of the cases; in Kompong Thom we were able to stay only one night in the village, and in Battambang two nights, both times due to security concerns. In Kompong Cham we stayed in one village for 10 days; in Kratie we stayed in two different villages, for around 5-6 days each. I must therefore preface this introduction to my study by stating that we were able to gather the most accurate and in-depth data from those villages where we were able to stay for a longer length of time. However, we conducted extensive interviews in all of the villages we visited where Pact’s partner NGOs have credit programs, both with members and non-members of the programs.

I must also stress that as we gathered data only from one or two villages where credit programs were being conducted, the research we gathered, as well as the impressions Samav and I received in those villages about the credit program, cannot be applied to the credit program of each NGO as a whole. What we were able to witness was just a very small sample of the strengths and weaknesses of the credit programs as they operated in those particular villages. However, we took care to choose villages that were as representative as possible of all the communitiess the CNGO had programs in. The data gathered from Urban Sector Group in Phnom Penh is different for several reasons: one, I did not stay in the communities USG has programs in, for logistical and security reasons, and two, I conducted mainly group interviews instead of individual interviews, as it is more difficult to arrange interviews with people living in different parts of the city who often work during the day, marketing and vending.

Indicators Used to Study Credit Programs

In my study, I wanted to focus on qualitative, as opposed to quantitative, aspects of the various credit programs. Reports produced by NGOs, donors, and consultants in the past have focused on the quantitative aspects of credit programs. These include the number of loans given, the number of members of a credit program, the amount of loans outstanding, repayment rates, etc. There has been very little research done into the non-financial, qualitative aspects of credit programs, both in Cambodia and around the world. There are several reasons for this; one is that credit programs are seen as financial by their very nature, and therefore the emphasis has been on financial sustainability and repayment rates. Another may be that while it is quite simple to calculate how many loans have been given out, how many have been repaid, and how many are still outstanding simply through accurate accounting, it is much more difficult to measure the qualitative aspects of a credit program. A final reason that NGOs, whether international or local, may often overlook certain qualitative aspects of their programs, is that they consider them either secondary to the main goal of giving credit or as an additional but unintended benefit of the program.


I feel that one of the most important qualitative aspects of credit programs is individual and group empowerment. In order for beneficiaries of any community development program, credit or otherwise, to feel that they have ownership of and responsibility for the program, they must feel empowered to a certain extent. If they are not empowered by the community development program, then it simply becomes another "handout" from an NGO, without the direct involvement of the people. The community members become simply recipients of the benefits of the program, and do not feel a real connection to their own development. If, however, people feel empowered to make plans for and change their future and feel able to provide for their families with the help of the community development program, then they will feel a real connection to that program. They become "owners" of the program and "owners" of their own destiny. The same is true for credit programs: if people do not feel empowered enough to join the program in the first place, they will not be able to benefit from it. If people are empowered enough to join the program, but then have difficulty repaying their loans or finding constructive ways to use those loans, then not only the member but also the program will suffer.

But delivery of services and the creation of programs alone are not enough to empower people. Empowerment cannot be measured by the number of activities a credit program has; if this were the case we could say that each one of the credit programs I researched have empowerment built into them. Empowering people is a process, not simply the creation of new programs. In talking about a development program he helped to create, James Taylor notes "As always it was easier to measure the "products" delivered through the process. A range of new facilities and activities, new community structures and committees, numbers of children, elderly persons and youth involved in programmes...But in attempting to measure empowerment we have to look beyond these more simply measured achievements."

Empowerment is very difficult to define; it can mean different things to different people, and at different times in their lives. Empowerment is also very difficult to translate directly into Khmer, as it is a very conceptual word. The literal meaning is "to have power within oneself". As I have begun to define it and re-define it over the course of this study, however, it has come to mean many different things. I now use the following definitions for empowerment; they are derived from my own academic research and my field research in Cambodia:

Definitions of empowerment

  • Confidence in one’s own abilities
  • Ability to make decisions about and plan for the future
  • Knowing what changes are needed to improve one’s life and how to make those changes
  • Ability to care for self and family

Some of the Khmer terms that Samav and I came across during our research are:

  • p’dal sut chia m’cha (offering rights of ownership)
  • komlang chut (strength of heart)
  • p’dal sut omnach (offering rights of power)

I have been told that none of these terms still accurately describes empowerment, but they were terms used by the different CNGOs, and therefore terms which most community members were familiar with. Familiarity with the word, however, does not necessarily mean that people understood the word, as we often discovered. Many people either could not give us a definition or example of empowerment, or said that they felt they were not empowered, even though in some cases they are empowered, according to the above definitions. Many members of credit programs had heard one of the Khmer definitions for empowerment given above at their credit program meetings, but did not seem to grasp what exactly empowerment means. Lack of understanding of the definition of empowerment, however, does not necessarily mean that these people are not empowered; they simply may not be able to articulate what empowerment means for them personally.

As one can see, therefore, measuring empowerment is a very difficult thing to do, especially over only a short period of time. However, by talking with a community member about how they see their family’s current economic situation, how they feel about being a member of the credit program, why they decided not to join the program, how they see their role in their community, and what their hopes for the future are, Samav and I were able to get some sense of how people viewed themselves in relation to their world, and this in turn gave a sense of how empowered or disempowered they may have felt. Taylor, in his article on measuring empowerment, talks about this relation of the self to the outer world: "Our relationship with ourselves constitutes our basic orientation towards the world. We can feel essentially assertive or victimized; competent and in control, or perpetually undermined and exploited; confident and affirmed, or insecure – not only in specific relationships with others, but within ourselves."

Obviously the longer amount of time we spent in a village, getting to know individuals, seeing them in their family situations and in their interactions with others in the village, and participating in their credit group meetings, the better we were able to get a sense of people’s level of empowerment. As a result, even though we specifically asked each member and non-member of credit programs questions related to empowerment, the data can be interpreted in many ways. There were specific examples of empowerment and disempowerment that we observed in the villages, and these were our best sources of data on people’s levels of empowerment.

Village Solidarity

While slightly easier to measure and observe than empowerment, the extent to which Samav and I were able to observe the level of solidarity within a village was heavily dependent upon how long we conducted research in a village, and whether or not we actually stayed in the village for any length of time. Again, the case of Urban Sector Group was different: while I did not stay in the communities I did research in, I was able to gain a sense of the level of solidarity in the community. This was mainly through the group and individual interviews I conducted, and what people said about the improvements that had been made in their communities since USG started conducting credit and savings programs there. Some examples of solidarity in these communities included the following:

  • Members of the community organizing regular garbage collection, as there are no formal social services in squatter communities.
  • Community members getting together to organize nightly guard-watches
  • Members of communities coming together to negotiate, with the help of USG, in discussions with municipal authorities in eviction cases

In the villages, Samav and I asked credit members and non-members what qualities they felt constitute a ‘community’, whether or not they thought their village is a community and if they could give specific examples of solidarity in their villages. Many people had difficulty separating the concepts of ‘village’ and ‘community’. The Khmer term we used for ‘community’ is sahakoom. But as we often explained to people, a village can be simply a collection of households; if it lacks certain qualities of solidarity, mutual cooperation and trust, it cannot truly be called a community. Most people we spoke with said that their villages are communities, and they gave us several examples of community solidarity. These include:

  • The ability to borrow small amounts of money or rice from others in the village
  • Village cooperation during festivals
  • Households contributing money and assistance during weddings and funerals
  • Provas dai (literally "exchange of hands")systems of exchanging labor, farming tools, or farm animals
  • Bartering systems of exchanging food for labor

In addition to these stated examples of village solidarity, Samav and I were also able to observe, in almost all of the villages we conducted research in, more indirect examples of solidarity. These included villagers gathering together in the middle of the day or in the evening to chat, discuss activities in the village, and offer each other advice on minor matters. We also observed villagers who were more well-off assisting their less well-off neighbors by giving them a spare sarong, krama, food, or small amounts of money. Samav and I compared the different villages we conducted research in in terms of their levels of solidarity, and could observe noticeable differences in solidarity from one village to another. I believe the history, location, age, and population of the village very often makes a difference in the amount of solidarity that exists.

We also noticed that there were some individual households or groups of households who appeared to be excluded from the community; these households were often both physically and socially isolated from the rest of the village, and other villagers would sometimes look upon or speak about these people with a certain amount of disdain. Not surprisingly, the people who lived in these ‘isolated’ households told us that they felt they were not "members" of the community, and almost without exception they were the poorest households in the village. These people often had never heard of a credit program in the village, or told us that they knew about the program, but were never invited to join it.

Reaching the very poor

The efforts of the NGO in including the very poor in the credit program is my final indicator of qualitative success. Whether this was done through the direct efforts of the NGO staff or the village credit leaders, this was one of the easiest indicators to measure. One of the first activities Samav and I conducted in each village we went to was to draw a village map, usually with the help of either the NGO staff or a village credit leader. This gave us an accurate picture of the village’s demographics: the construction material and condition of the houses, the number of members and non-members, and the general layout of the houses in the villages. We would then go to interview a mixed sample of people living in "richer" houses (wood houses with metal or tile roofs), and "poorer" houses (thatch houses, often with thatch roofs and sometimes low to the ground). We also mixed our sample of members and non-members to interview.

By mapping the types of houses, we were able to get a sense of the poverty levels of households in the villages. Wood houses, built high above the ground with metal or tile roofs, would obviously cost a lot of money in terms of material and labor. Thatch, a readily available material, indicates a lower-income household. Some credit programs allow people to use their loans for home improvements; when people take their loans for this type of activity, one of the first things they buy is a metal roof. If they have even more money, they will build a wood house above the ground, perhaps with a tile roof. Families that lived in houses built of wood with metal or tile roofs inevitably had more household goods, more land, more farming tools, and more animals. Families living in thatch houses, with a few notable exceptions, inevitably had less land, animals, household goods and farming tools. Even among thatch houses, there were those that were better-constructed and higher above ground; these families were better-off than those living in thatch houses that are situated either on the ground or low to the ground. I believe, therefore, that we can use house structure as one measurement of a household’s income level.

We measured the success of the credit program in including the very poor in each village in a number of ways. These included:

  • The percentage of households in a village who were members of the credit program
  • Villagers’ knowledge of the existence of the credit program and how it works
  • Villagers’ perception of whether or not the credit program helps the very poor in the village
  • The household income levels of credit program members and non-members (measured by house structure and household income surveys)
  • Interviews with villagers to determine whether or not they were ever invited to join the credit program

Samav and I came up with a wide variety of results on this indicator. In some villages, a large number of the people in the village had been invited to join the program and had become members; many of these members were actually quite poor, but managed to remain in the program. In some villages a majority of the villagers had never even heard of the existence of the credit program, let alone having been invited to join. In still other villages, we were told by members and non-members that the NGO had certain criteria that had to be met before a villager could join the program. Of all the indicators used to measure the credit programs operating in the villages we researched, NGOs seemed to have the most difficulty in including very poor villagers in their credit programs.

Many practitioners and researchers have decided that credit does not reach the very poor. If people do not have access to markets, if they do not have a viable business plan, if they have no way of generating an income, how can they benefit from a credit program? There will always be a certain percentage of villagers who will have great difficulty in joining a credit program, saving money, and repaying their loans. However, I still believe that these people need to be at least given a chance to join the program. If they are not encouraged to join the program, NGOs whose stated mandate is to "offer credit to the very poor" are not only doing a disservice to their beneficiaries, they are also not meeting their stated mission.


In conducting this research, it was not my intention to analyze every credit NGO that is partnered with Pact; it would take a much longer amount of time and much more effort to do a thorough evaluation of each of the NGOs I worked with. As I was focusing only on qualitative aspects of the credit programs, I did not pay much attention to the financial sustainability or repayment rates of the programs. However, much of the qualitative information we discovered can be applied to improving the financial sustainability of these programs. There is more to offering credit than simply handing out loans: credit should be about improving people’s lives in a holistic manner, economically and socially. Credit should only be a means to a better future; the credit members themselves need to be empowered through credit to improve their own lives.

The questions we are faced with now are these: Are credit programs empowering people to take control of and improve their future? Are people’s overall way of life improving over time, as they save and take loans through the programs? Or are they simply becoming dependent on these community development programs, and will they sink back into harsh poverty without the programs? In order for these credit programs to be sustainable into the future, in order to really make a difference in people’s lives, I believe credit CNGOs need to focus more on the real purpose behind credit: improving people’s lives so that they can survive and prosper over the long term.

I feel that if the credit NGOs I researched were to pay more careful attention to these qualitative aspects of credit that I have only begun to study, if the NGO staff spent more time in the communities talking with the credit members about their hopes for the future, then answers to the questions above would begin to be made clear. In addition, by paying more attention to how the loans are being used and supporting the credit members in their efforts to improve their futures, the credit programs would become more financially sustainable. After all, what is the point in offering loans to people if they are not truly improving people’s lives? I believe that this is the end goal of credit programs, and I also believe that the credit NGOs I researched are striving to meet this goal. In order to achieve this, however, we all need to focus not only on financial sustainability, but on how qualitative aspects of credit programs can make credit programs financially sustainable into the future.

It is my sincere hope that the research that Samav and I have conducted over the past several months will help give the credit NGOs a better picture of what is actually happening in the communities they are working in. I discovered successes and failures of the programs in terms of my qualitative indicators; on the whole, however, I believe that with some improvements, these credit NGOs will be able to make a real difference in people’s lives. I would like to take this opportunity to thank all of the NGOs for their assistance and cooperation; without their support this study could never have taken place.

Hari Srinivas -
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