Jan P.

Maes
THE “PROMISING PRACTICES” CASE STUDY SERIES:
PROGRAMS, PRODUCTS AND SERVICES SPECIFICALLY DESIGNED TO REACH
VERY POOR PEOPLE

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

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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.

II. 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.

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 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.

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 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

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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