Jan P.


Trickle Up’s Microenterprise Seed Capital and Matched Savings for Very Poor People Living with HIV/AIDS in Phnom Penh, Cambodia
I. Context: The Trickle Up Program is a U.S.-based organization engaged in microenterprise development for very poor households in 14 core countries, including Cambodia. Because it targets the most vulnerable sections of the population, such as the rural landless, women-led households, people with disabilities, including those living with HIV/AIDS, Trickle Up employs a seed capital grant strategy to facilitate a client’s movement from absolute poverty toward economic self-reliance. Very poor families affected by HIV/AIDS find taking a loan too risky, because they have no reserve to make loan payments in case sickness or other family emergencies prevent their enterprises to make a profit or to make any income at all. This case study describes Trickle Up’s collaboration with W.O.M.E.N., a small Cambodian NGO that provides home health care services and health education to slum dwellers affected by HIV/AIDS in Phnom Penh. As part of a two-year pilot project, funded by the Elton John Aids Foundation, Trickle Up has provided $100 seed capital grants to families in W.O.M.E.N.’s home health care program to start or expand microenterprises. These households also participate in a flexible individual savings program, in which the home healthcare teams are employed to collect savings during their regular visits. Trickle Up encouraged these savings by matching a portion of the clients’ weekly savings amount during the first year after the seed capital grants had been disbursed. a. Socioeconomic overview More than a quarter of Phnom Penh’s one million residents live in shantytowns and informal settlements on public land. Unemployment is high and the HIV prevalence rate is higher than Cambodia’s average of 2.7%, the highest rate in Asia. Health services are poor and often hard to access by the poorest. Moreover, many of the slums are flooded during the rain season, which causes many families to lose their belongings and to suffer from water-borne infections. People whose immune system has been compromised by AIDS suffer most. b. Purpose of intervention Drawing on the synergy between income generation and health care, the project aims to maximize the chances that people living with HIV/AIDS stay healthy and run a successful business. The goal of Trickle Up is to assist the very poor in successfully managing a microenterprise, even if success is not guaranteed. As the case with W.O.M.E.N. illustrates, Trickle Up deliberately targets people who are committed to improve their household income through enterprise but who are not eligible for loans or


other financial assistance. Because of their disease, people living with HIV/AIDS face a high risk of reduced income and higher medical expenses, which in turn forces them to go into debt and ultimately sell of their assets. Despite the fact that some households fail to continue their business after some time (because of sickness or death of income earners in the family), many are successful and use their profits to afford better medicine and food, and even to send their children to school. To mitigate the risk of future disasters, Trickle Up promotes savings that can be deposited and withdrawn regularly and in flexible amounts by participants without having to leave their homes. As an incentive for savings, Trickle Up matches a portion of each participant’s savings. Since these families are vulnerable to economic shocks (slum fires, flooding) and health shocks (rain season, HIV-related symptoms), regular savings are meant to assist them in times of financial stress (to buy food and medicine during sickness and to restart their business once they are strong enough again). c. Description of target group/clients/members Members involved in W.O.M.E.N.’s homecare program are HIV positive, which they learned after taking a voluntary test. In many households at least one parent, usually the male and often the only breadwinner, has died as the result of the disease. At that time, in many families the virus has passed to the surviving spouse and several children, especially the younger ones. Frequent episodes of untreated sickness, lack of capital and previous business experience, and stigmatization are the most important hurdles these predominantly female-led households face when making a living. Description of methodology: a. Summary of design concepts: The project combines microenterprise development, promotion of savings and healthcare services to poor people living with HIV/AIDS in Phnom Penh, Cambodia. A local Trickle Up coordinator is full-time in charge of the Trickle Up activities and steps (see below), but she is assisted by the homecare teams, who help her with savings collection and who keep her informed about the participants’ health status. Through W.O.M.E.N.’s healthcare program, patients receive psychological and medical counseling and advice on sanitation and diet during frequent home visits by the teams, have access to some basic medicines, and are referred to a local hospital for treatment in case someone becomes very sick. Trickle Up’s microenterprise program consists of business training, business planning and $100 seed capital grants, given in two consecutive $50 disbursements. The first disbursement takes place after completion of the business plan, and the second one is contingent upon a successful business report. Once the enterprises are funded, weekly savings are collected and matched up to a certain maximum. Savings are kept in a collective bank account for each group of 15 Trickle Up participants. From the beginning, at least two members of each family are involved in the program, so that one of them can continue running the business in case another becomes sick or dies. The business leader is always an adult, but the business assistant can be an older child. Often, more than two people per family are involved. Each family is entitled to one Trickle Up grant only. II.


b. Process/steps in implementations: Since the start of the pilot project in 2003, Trickle Up Program and W.O.M.E.N. have provided 120 predominantly female PLWHAs and their households with seed capital and business training to start or expand a business managed by the household. A Trickle Up coordinator, trained by Trickle Up Program, selects among the home healthcare patient population would-be entrepreneurs who are willing to start or expand a microenterprise. The Trickle Up coordinator then provides selected households (who elect their business leader and at least one business assistant) with basic business training and mentoring to write their business plans. After completing their business plan, each business group receives a first disbursement of $50 of seed capital to buy equipment, materials and other items needed to start the business. After business startup, the Trickle Up coordinator visits each household once a week to provide further business counseling and to collect savings. Each business leader is required to save at least 500 Riel (12.5 US cents) a week into a personal savings funds, from which money can be withdrawn at any time for any purpose. In addition, each group was encouraged to save cash for a business savings fund, matched weekly up to a maximum of 2,000 Riel (50 US cents), and a cumulative maximum of 80,000 Riel ($20) per business group during one year of savings. Business savings can be withdrawn for business use only, but the savings match is deposited into the personal savings account, thereby strengthening a household’s capacity to deal with financial emergencies caused by sickness, death or other events. After the one-year matching period, most participants have saved at least $20 in their business accounts and received the same amount from Trickle up for their personal savings account. After the matching period is over, households can opt to keep saving in the group bank account, or they can withdraw their funds if they prefer doing so. The Trickle Up coordinator also facilitates monthly mutual support meetings, attended by groups of 15 microentrepreneurs, during which members exchange experiences related to business and health issues and receive occasional training to achieve the necessary skills to conduct their own meetings and manage their funds. Each group of 15 microentrepreneurs also opens a joint bank account to deposit their savings.

c. Methods of measuring results: Even though seed capital grants and business training are standard ingredients in the Trickle Up methodology, the business savings concept was a new component in this pilot project and results only preliminary. An evaluation was performed one year into the program based on interviews and routine data collected by the field staff. Earlier, the impact of the standard Trickle Up program had been assessed using a quantitative survey that explored the various ways that participants had invested their seed capital and used the profits and savings.


III. Results All participating households started new businesses or expanded existing ones that raised family income, and were often their only income source. After one year all businesses were continuing, even though several business members (leaders as well as assistants) had been seriously ill for some time and some had died. Because members had to select a business partner, several families were able to continue their business after the main breadwinner died. Most program participants had built up a substantial amount of savings and qualified for the entire savings match of $20. By earning a better income these people living with HIV/AIDS were able to better feed their families and afford more medicine and hospital visits, preventing further health deterioration and reducing their economic vulnerability. Several families also reported that they used their business profits to pay for school expenses of their children, and some had been able to use their savings to expand their businesses. Participants reported feeling empowered by their improved ability to be productive and to save, and experienced less stress as a result of the improved household financial condition. IV. Resources required/cost to institution The program operating expenses are of the same magnitude as for most loan programs, consisting mainly of field worker salaries. Unlike loan programs, however, neither the operating expenses nor the seed capital and savings match (all in the form of a grant) are being paid back. This is justified by the fact that members of this target group are usually unwilling to take the risk associated with a loan and unable to adhere to a regular repayment schedule. In CGAP Focus Note 20, Joan Parker states that “micro-grants for the hardcore poor…or people affected by HIV/AIDS may constitute a longer-term safety net. They may use loans for basic consumption or health needs rather than invest in income-earning activities…microcredit may further erode their economic position. Grants can be the first step in reducing vulnerability, and allow the hardcore poor to invest time and resources in learning skills and building an asset base.” Trickle Up’s philosophy is that an effective way to improve these people’s financial resilience to crises, is to first start a sustainable microenterprise with seed capital and practical business training, and then build one’s personal savings that can be used for business expansion and as a means of self-insurance in case of the death of the microentrepreneur. A potential source of cost savings lies in making the seed capital grants flexible (in lieu of the current fixed $100) according to local conditions and business needs. Trickle Up is currently experimenting with this and other potential cost-savings. V. Challenges/pitfalls/lessons learned Sickness and death of a family member pose an enormous stress on these already extremely vulnerable people. When this happens, a widow often sees no solution but to migrate back to her birth village and find support with distant relatives or in the local Buddhist monastery. As a result, the business is usually sold or terminated and W.O.M.E.N. staff lose track of the program participants. Usually, these families ask to


withdraw their savings to help them cope with the emergency. In a few cases, a sick entrepreneur moved back to the city once she felt better, and used her savings to start up her business again. Without adequate healthcare and access to anti-retroviral medicines, these people are very vulnerable and are always at risk losing their good health, their most important business asset. ARVs have become more common in Cambodia recently, but it is still hard for people to access them, especially in Phnom Penh, where the demand is highest. A few microentrepreneurs, however, have been able to use their business profits to pay for transportation and bribes to obtain ARVs that are supposed to be free, in other provinces. People living with HIV/AIDS are still being stigmatized in Cambodia, which in addition to their weak health poses another hurdle to the types of business they can engage in. Great progress has been made, however, especially in the slums, arguably because very few people belong to families that are not affected by HIV/AIDS. A case in point is the fact that one of the Trickle Up entrepreneurs owns a very profitable curb side restaurant in one of the biggest slum areas. Finally, because of the high risk of sickness, it is virtually impossible to fund loan funds by savings group members. The risk of repayment is simply too high. However, the fact that virtually all participants have been able to save enough to qualify for the maximum savings match indicates that some repayment capacity is present. A potential solution might exist if members agree to pay a small insurance fee to build up a group reserve fund to replace unpaid loan amounts for households who default on a loan for predetermined reasons such as death in the family. VI. Contact information/sources of information Janet Heisey, asia@trickleup.org, Trickle Up program officer for Asia Jan Maes, janpmaes@yahoo.com, independent consultant


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