Every time one picks up the paper, s/he is likely to flip the page on an article which discretely points to the demand for financial savings products. The Wangzhi Journal recently published an article, Spring Harvest of Debt for Parched Farms in Southern China, documenting drought as another disconcerting indicator of global climate change. The combination of an ongoing surge of dam construction, population growth, and toxic pollutants, has been bad news bearers (to put it lightly) for farmers world over. The example of 37-year old farmer from China's Yunnan Province, Huang Jianxue, whose most recent plot of winter wheat amounted to a mere 5% of his normal crop yield is telling of the unforeseen and extreme cut in cash flow exposing more individuals to extreme poverty. The article cites several cases of individuals resorting to borrowing; however, the hurdle to scratch for another source of income coupled with accumulating current expenses will most likely stifle their ability to meet repayment obligations. With these financial troubles in the foreground, many microfinance practitioners and academics have assigned more value to microsavings to provide leverage to the high saturation of credit provision. Although easier recommended than done, encouraging people to save via financial intermediation would provide them access to liquid cash under dire emergencies.
The problem outlined in the article is not exclusive to China. As I expressed in my last post, Cambodia's microfinance environment is ripe for the availability of diverse savings products designed for its clients according to well-defined profiles, whereby the products respond to the clients' particular savings needs. Cambodia Microfinance Association (CMA) recognizes this need and has set one of the goals to coordinate a public awareness campaign to encourage Cambodians to commit their savings to microfinance institutions. The ADB in collaboration with 3 other MFIs produced an informational and rather entertaining video spot to mobilize savings, however due to financial limitations and user-inaccessibility, the video failed to reach the general public. CMA is currently seeking funding to broadcast the ADB video and looking to launch public radio and newspaper campaigns, both of which would be more effective given Cambodia’s wide audience base for these media forms.
