Drawing on years of insights gained while fostering savings at the community level, Padek has launched an exciting new phase in its support to poor people in rural areas. “Saving Communities”, Padek’s new approach, will establish roughly 1000 new community savings groups that will provide a critical social safety net for approximately 14000 members and their families.

Based on the experience of similar models in Cambodia with poor and very poor communities, average savings per member over an 18-month period will be around US$66—making the total value of savings from new groups an estimated US$500,000.

These savings groups will mean that when families are buffeted with challenges like illness or failed crops, drawing on their savings can cushion the blow. Families can also take out short-term loans as a way to improve their livelihoods and to take advantage of new opportunities.

These accessible, transparent, flexible, and community-managed groups and associations are driven entirely by the community, without an external injection of funding. Likewise the interest from loans stays within the group, so community capital continues to build.

After receiving training on best practices and financial management, Group members themselves are making the decisions on best use of group savings, whether they will grant loans and what the interest rate will be. These funds are designed to be autonomous and self-policing. Every transaction is made in front of all members at regular meetings, which helps ensure accountability and transparency. The result of this community-owned approach is that there are very few people who default – around 4% in Cambodia.

Generally, the majority of members of these groups are women, who are empowered in the process, and their voices are strengthened within the community. As “Saving Communities” flourish, the Padek team will watch closely to see how gender roles and relationships change.