LGBTI micro-finance

The article explains why LGBTI people in Cambodia are financially excluded and why they become or stay poor. It also explains what MRI is doing to ensure that LGBTI people can access micro-finance products to step out of poverty.
LGBTI micro-finance

Since 2012, MRI has been developing, testing and fine-tuning an innovative micro-finance model. The model reaches those in the LGBTI community who live in poverty and destitution. This work currently takes place in Phnom Penh, Cambodia and MRI is hoping to replicate it in other areas.

To this end, on 20th January 2018, MRI visited the LGBTI community in Somroung Yong District for the third time. The area is part of Takeo Province which is about 50km from Phnom Penh City in Cambodia. Takeo is one of the areas where MRI is considering replicating its LGBTI micro-finance model.

The model enables LGBTI people to access credit to start a small business. It also supports beneficiaries with ongoing mentoring and guidance. Without MRI, many LGBTI people would not be able to access credit. This is because of their history of family rejection, isolation, poverty and discrimination in education and employment. This history makes LGBTI people unattractive clients to financial institutions and they remain financially excluded.

Why LGBTI people are financially excluded

Let’s consider Daevy*, a trans person, who accessed credit thanks to MRI. When they approached MRI they:

  • had dropped out of school
  • their family had rejected them at a young age
  • borrowed money from street lenders to survive
  • were living on less than a dollar a day. They wanted to set up a food stall in the market to improve their livelihood.

When they applied for a $300 loan from a micro-finance institution to start their small income generating activity they were rejected because they:

  1. did not have a guarantor – usually a family member or friends, they were extremely isolated
  2. already had too many debts
  3. did not have any guarantee to offer. Leaving home at a young age meant that they hadn’t accumulated any assets (motorbike, or a piece of land).

A guarantee or guarantor and the lack of other debts are common requirements to access micro-credit. Many LGBTI people like Daevy do not have them because of the isolation and rejection they have experienced.

The impact of MRI’s work so far

The issues that Daevy faced are common amongst LGBTI people.  They prevent them from accessing credit and MRI believes that this is one of the reasons why LGBTI people stay poor. However, thanks to MRI many LGBTI people have the chance to step out of poverty and to take charge of their lives.

Initial evidence shows that the impact of this work is three-fold; it:

  1. improves the livelihoods of LGBTI people
  2. changes peoples’ minds and hearts. Through small businesses LGBTI people improve their status within the community and their families, thereby gaining greater acceptance
  3. enables more people on the ground to become vocal advocates for LGBTI rights. It also provides valuable data to lobby financial institutions for LGBTI inclusion.

MRI is excited at the prospect of replicating its model throughout Cambodia.  A model that not only improves peoples’ lives, but which also contributes to strengthening LGBTI rights.

* Name has been changed