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33-year old Laom Ry started her roadside noodle shop with just US$20 – the sum of the monthly rent she pays for the small plot of land on the outskirts of Siem Reap City, Cambodia. Alongside her passion for cooking her speciality noodle dish of kuy tea, Ry’s primary motivation for starting the business was to earn enough to pay off her mounting debt, and keep her family afloat.
Ry used to make her living across the border in Thailand, but was keen to return home, where she is now settled with her two daughters, aged 7 and 12. “The main benefit of having my own business is that I can continue to live with my family, rather than having to seek work elsewhere,” she explains. Ry’s husband currently works as a Tuk Tuk driver in Siem Reap City, and is able to return home every month or two.
Although things have been looking up since Ry started her business, it has not been an easy road for the family. Prior to COVID-19, Ry took out a loan from the bank, but when the pandemic hit, she struggled to make the necessary re-payments. As a result, like many others in her situation, Ry resorted to borrowing from informal lenders in the community, who charge extortionately high interest rates of up to 20 per cent. Although the practice is illegal in Cambodia, with widespread efforts from authorities to crack down on the issue, informal and predatory lending remains a major challenge in communities across the country.
The burden of indebtedness is a daily struggle for many households and individuals across the region, with disproportionate impacts on women. According to a recent report from the United Nations Economic and Social Commission (ESCAP), in at least 65 per cent of selected member states and associate member states analysed, women are more financially worried and less financially resilient than men. Women’s financial worrying and resilience are closely linked to social norms and roles within their households and communities. While the control of money often remains with men, women are generally expected to take on the role of the household financial planner, including managing household budgets, handling loans from multiple lenders and controlling loan (re)negotiations.
For Ry, while her husband has been a significant source of emotional support, given the family’s circumstances, the burden of repayment negotiations fall largely on her. “I face many challenges every day”, explains Ry. “I tried to negotiate with the lenders to postpone the payments, to let me get back on my feet, but they didn’t listen.” Compounding these challenges, Ry has faced stigma and social ostracization as a result of her situation, and was told that people in the community would not support her business. The daily pressure on the family from creditors has also caused significant stress for Ry’s daughters, impacting on their education.
However, just when Ry was at her lowest, things started to look up. In 2023, Ry was approached by a social worker from local NGO, This Life, through which she has received life-changing support. In partnership with ESCAP, This Life has supported 20 indebted women entrepreneurs such as Ry to negotiate the terms of their debt and create a debt management plan, alongside the provision of grants to expand their business activities.
“This is the first time an organisation and authorities have supported my family,” says Ry. “Thanks to the support from This Life, I’ve been able to recover a bit. With the grant, I was able to purchase a new ice box, install a roof, and make many other improvements. I’ve also learned how to discuss solutions with lenders, and how to calculate interest rates before taking out any loans.”
While the benefits of financial inclusion and access to finance for women-led MSMEs are well established, it is crucial that such advancements are accompanied by broader efforts to eliminate structural gendered inequalities and enhance financial resilience, with strong consumer protection mechanisms and initiatives to improve financial literacy in place.
To this end, through the partnership between this Life and ESCAP, in addition to providing direct case-based support to women such as Ry, more broadly, training has been provided to local authorities in 10 communes in Siem Reap, to equip them with the skills to advise women on financial literacy, debt management and income generation.
For Ry, the support she has received from This Life and local authorities has been a turning point for her, and her situation has markedly improved. Thanks to the support with loan negotiations and advice on debt settlement, she has been able to buy more time from the lenders. She has also recently expanded her business to sell additional dishes, expanding her customer base and increasing her income. As a result, not only has Ry’s mental health improved, her children are now happier and more focused on school. With a renewed sense of motivation and newfound confidence in her financial management and business development skills, Ry has aspirations to continue expanding her business, settle her debts, and support her children through their education so that she can give them a better life.
