In 2008, Unitus partnered with Angkor Microfinance Kampuchea (AMK), an MFI working in rural Cambodia to provide financial services to low-income households. Led by CEO Paul Luchtenberg, AMK is widely recognized for their social mission and was one of the first organizations to receive the Social Performance Reporting Award in 2009. Unitus sat down with Paul last October to talk about AMK’s strong social focus, their new uItra poor program, and his development roots.
Q: Tell us about AMK Cambodia.
A: AMK is a microfinance organization based in Cambodia. We started in 2003 and now have over 200,000 clients with an average loan size of $110. At AMK, we go into the remote, rural areas and find an efficient, cost-effective way to reach a lot of people with small loans.
We were the opposite of most providers in Cambodia who started in Phnom Penh, the capital city, and then moved out. We started in all the remote, rural areas and then expanded into Phnom Penh. Most of Cambodia—about 85 percent of the population—lives in rural areas.
Q: What was your background before joining AMK?
A: Before I joined AMK about two and a half years ago, I was the Senior Advisor of World Relief, based in Cambodia but covering much of the world. I was working in microfinance, first as the Asia Regional and then the Senior Technical Advisor. Prior to that, I was working regionally for about eight years.
It’s quite different to be an advisor. You work with an organization and you make suggestions, but if you’re running the institution as I am now, then you make the decisions and you do it. That was really refreshing for me when I joined AMK—to have that hands-on work.
Q: There’s a new ultra poor program that recently launched with AMK’s Special Interest Group Unit (SIGU), a new initiative for AMK. Tell us about that program and how it developed.
A: Our Ultra Poor Initiative (UPI) program focuses on victims of human trafficking. Cambodia has a lot of problems with human trafficking, and we’ve been approached over the years by different organizations that see the need to have financial services for the girls and boys getting out of these situations.
Primarily, the message I kept giving them was, “Don’t try and do it [offer financial services] yourselves; try and partner.”
The problem is that there’s not really anyone to partner with. So, it came that a doctoral student was in Cambodia, interested in human trafficking, and researched the opportunities and need out there. Based on that research, we submitted a proposal to Unitus to scale up that initiative.
Worldwide, there’s been very little done in terms of linking human trafficking with microfinance. So, we’re charting new waters here and trying to figure it out. What we do know is that it’s very complex. It’s dangerous for the organizations working with these victims. They have to keep a low profile, which increases the complexity of finding good partners. And the victims have a lot of emotional challenges and are quite hard to work with, so you need a strong partner who can work with them on counseling and other support issues that we’re just not equipped for. One of the reasons I kept encouraging these organizations not to do financial services is that they’re such distinctly different roles. We’ve got several great partners who we’re working with now to provide training and financial services to the victims, and eventually we’ll look at doing savings and a few loans.
We’re quite excited about it. It’s challenging, but it’s a big need, and there’s not a lot of industry experience in it. So, we’ll work through it together and figure out how to make it work.
Q: AMK recently won an award for social performance reporting. Can you talk a bit about how AMK addresses Social Performance Management and transparency in your organization?
A: AMK originated from Concern Worldwide, which is an international relief and development organization. They were really committed to reaching the poor; that’s what their mission was all about. So, we have those roots and we retain a strong social focus. We’re here to help people. And we work to make sure we’re efficient, are lowering costs, and are passing those savings along to our clients.
AMK has structures in place to ensure that we keep our social commitment and focus. For instance, we have a social performance committee that mirrors our audit and finance committee. Both of these sides are important to reporting at the Board level. Institutionally, we’ve put a lot of focus on questions such as, “Are we ensuring we’re not doing any harm?” “How poor are the clients we’re working with compared to other populations?”
We also do depth of outreach surveys. For example, we just did a big, rigorous impact survey that included clients and non-clients over a two-year period. We’ve just had the results now, and we’ll do another one in three years, so it’ll end up being a five-year study. It’ll be a pretty good landmark as there are not that many longitudinal studies with control groups out there. And we feel that you need to have a baseline to be a serious impact study.
So, institutionally, we’ve invested a lot in social performance and ensuring that we’re not doing harm. And in the end, really knowing our clients is really the key, so from that perspective, it makes social and financial sense. If you know your clients, you’re going to be able to meet their needs and provide for their needs. For example, we looked at our client satisfaction. In the study, about 10 percent said they were unhappy with their loan size because the loan size was quite small. But if you break that into the economic status of those surveyed—“very poor,” “poor,” and “better off”—it was really the “poor” and “better off” who said they wanted larger loans. For the “very poor,” there were really no complaints, and for them, it was an appropriate loan. But you have to do rigorous research to know that.
In terms of the award, the 2009 Social Performance Reporting Gold Awardwas given to only three organizations that had been reporting to the MIX, so we were really happy to have been one of the three. We were the only one in Asia and the other two were in Peru.
Q: What gives you the most satisfaction out of working for AMK?
A: Working with my management team is a big part of it and seeing staff develop. We’ve grown quite quickly—tripling or quadrupling over the last few years—and I enjoy seeing staff rise to the occasion. There’s not the personnel pool that there is in India. So much of the credit of anything that happens at AMK is really the team that I’m working with.
At AMK, we work with really poor people in very remote areas where no one else is going. And it’s rewarding to go to the field to ask, “Are there people here who are too poor to receive a loan?” And it’s actually quite rare that there are. We can give a loan of $2, so anyone can have the loan. There are certain people who choose not to, but the key is that we’re not excluding anyone. So, I do feel like we’re making a difference.
I’m an old development guy; I have development roots, and have turned into a banker over the years, but I still am linked to the social mission and really want to help people. We still have to be profitable to be sustainable; that’s life. But we’re in this industry, and we’re doing this to make an impact on lives, so the fact that AMK is working with very poor people and is helping them is very fulfilling.