Loan Refinancing Program Empowers Families

Domestic violence, child abuse, alcoholism and gambling: these are the harsh realities of life for the people of Steung Meanchey. CCF Director Scott Neeson knew these sorts of ailments didn’t spontaneously develop – there had to be a reason behind them.

He invited the mothers of children in CCF’s Day Care Center to a meeting to talk about their Day Care needs, but the conversation soon turned to debt and the crippling loans that plagued each of them. Of the 134 mothers present, 80% cited debt as the negative turning point in their lives.

Most of the residents of Steung Meanchey arrive in Phnom Penh from the countryside, looking for work. Many were subsistence farmers from nearby provinces before falling on hard times, almost always the result of a medical emergency.

Unable to pay medical bills, the families were forced to sell their land and take out loans from money lenders. With staggering interest rates of 10-20% per month, the families buckled under the weight of the debts. Seeing no other future, they moved to Steung Meanchey to pick through rubbish and try to eke out a living.

Within months, the parents, most often the fathers, turned to alcohol and gambling, and, from there, it was a downhill slide into domestic violence and child abuse.

Scott has witnessed the demise of men who find themselves unemployed with no hope of finding work. Once their place as head of the family becomes threatened, their self esteem plummets.

Realizing the need to act, Scott canvassed the group, calculating the total debt of the Day Care mothers. The 134 families owed a total of $23,000 between them, or an average of $175 each. For most of us, that amount would not be a significant problem, but for these families, $175 is a sum they could not hope to repay in their lifetimes.

In response to this, Scott decided to start a refinancing program. With the help of two donors from the United States, he cleared the $23,000 debt, paying off all the money lenders. He then set about negotiating with the families to pay him back at just 2% per month.

“It’s important that they still have ownership over the debt,” Scott explained. “I figure if they were paying $30 a month in interest before, they can pay $3 a month now. This is not purely about charity, they still need to work.” While times are still tough, Scott is glad to see a significant change for most of the families.

“There’s definitely been improvement,” he said. “A couple of the men have really pulled themselves together, and one man is working really hard to get his farm back.”

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