IJERD – International Journal of Environmental and Rural Development (2010) 1–1

Research article
erd

Assessing Clients’ Satisfaction of Microfinance Institutions
in Cambodia - A Case Study of AMK
PUM SOPHY
Angkor Mikroheranhvatho Kampuchea (AMK) Co. Ltd., Cambodia
Email: sophy_pum@yahoo.com

THUN VALANTINA
Ministry of Agriculture, Forestry and Fisheries, Cambodia
Received 29 December 2009

Accepted 5 March 2010

Abstract Microfinance is widely advocated as a powerful tool to reduce poverty andimprove social inclusion. It can assist the poor by reducing their vulnerability and avoiding
economic shock. While scale and outreach have been critical indicators of microfinanceperformance, there has not been much investment in measuring whether clients are
satisfied with the microfinance products and services they have been accessing. This
article presents findings of a study by Angkor Mikroheranhvatho Kampuchea (AMK)
which is measuring client satisfaction with microfinance product and services. While theoverall aim is to access whether clients are satisfied or dissatisfied with microfinanceproducts and services, the study also explores the loan use (in comparison with othercompetitors). Is microfinance widely accepted by the clients? Do microfinance products
provide good coverage at affordable interest rates? Do the delivery mechanisms effectively
meet the clients need? These are among the key findings addressed in this study. The study
was designed to be qualitative by in-depth interview and gathering information fromMarch to May 2009 covering totally 648 new AMK clients in 18 provinces. The findings
provide the clients’ perception of microfinance product and services; in generally clientsare satisfied with AMK; more than 85 percent of the clients at least gave one reason forsatisfaction feedback. Approximately, 8 percent to 17 percent had at least one negative
comment on microfinance product and services. Low interest, providing loan as neededand giving loan at doorstep are crucial aspects of microfinance AMKs’ competitiveadvantage. The study also reported that the great majority of clients have used at least partof their loans for productive purpose, mostly in farm-related activities (agriculture andlivestock). Notably the study gives strong signals for improving product development andservice; more than that trying to retain as many clients as possible.
Keywords assessment, clients’ satisfaction, microfinance, AMK, Cambodia

INTRODUCTION
Client retention is important and less costly than finding new clients; therefore microfinanceinstitutions (MFIs) have to take care of their clients and understand their needs. Client satisfaction
survey is an efficient tool to assess the feedback of clients toward products and services. In thiscontext, AMK conducts client satisfaction surveys on an annual basis in order to provide theManagement team with valuable information for business decision making, in particular regarding
the improvement of the products and services range. Besides retrieving positive and negative
feedbacks from clients, the survey also provides key information on the loan uses (in comparisonwith other competitors) and the percentage of AMK clients having multiple loans simultaneously.

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METHODOLOGY
The client sample selection was done in two different steps: first, the villages were randomly
selected proportionate to the size of the new client population in all of AMK operation areas andsecond, in each village 12 clients were randomly selected for the study and extra six clients asreplacement sample. The study extracts information collected from March to May 2009 in 18
provinces and 54 villages.
RESULT AND DISCUSSION
As many as 504 new village bank (VB) clients and 144 new individual clients were interviewed.
Among the 648 clients, 86 clients had paid their loans back at the time of the interview (61 VB and25 ID clients); therefore only 562 clients (443 VB and 119 ID clients) provide feedback on AMK’sproduct and service.
Note that 443 active VB AMK clients have 459 active loans with AMK (6 households
reported two loans and 2 households reported three loans at the time of the interview) while 119 ID
clients have 121 active loans with AMK because 2 households reported two active loans.
How many client households are making multiple (simultaneous) loans?
In addition to their loans from AMK, households borrow from a range of other sources, bothinformal (moneylenders or relatives) and formal (Bank, MFIs or NGOs). Table1 below provides
the detailed figures of the aggregate - 30 percent of VB AMK clients and 37 percent of ID clients
who are also borrowing from other additional sources.

Table 1 Estimation of AMK client’s multiple loans
Total client
86387
175562648
31%

A. Inactive
a. Client with Active Loans from AMK (only)b. Client with Active AMK loans+ other loan(s)B. Client households with Active AMK loans (a+b)
Total Client sample (A+B)
Multiple Loan (b/B)

VB client
61312
131
443
504
30%

ID client
2575
44119
144
37%

Of the 443 households with current outstanding VB loans with AMK, a total of 312
households only had outstanding loans with AMK while 131 also reported additional loans fromeither formal or informal sources. Of these 131 households, 115 households (88%) had twooutstanding loans while 16 households (12%) had three outstanding loans.
Of the 119 active ID AMK clients, 44 clients have simultaneous loans from either formal orinformal sources. AMK does not provide loan to client having loan with other sources, however it
is noteworthy that the fact that a household has multiple loans does not necessarily mean that there
was a breach in policy regulations since the household may have borrowed from another source
after borrowing from AMK.
What do they use their loan for?
Based on the proposal made by the client, each loan is given for a specific use. The clientsnormally use the loan according to their needs and convenience. Each household was allowed to
identify multiple responses since many households use the loan for more than one purpose. Table 2
provides the summary of the findings for AMK VB and ID clients respectively in terms of both
total loan uses as well as the percentage of households who invest their loan for different purposes.
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There was marginal different figure in using loan between VB and ID clients for productive
purpose (77% Vs 80%) and consumption (44% Vs 40%); only 16% of VB clients used their loan
to build assets while ID clients used up to 28%.
In general 56% of total loan uses were used for productive purposes, 13% for asset building
and 31% to consumption purposes. 78% of total clients reported using at least part of their loans for
productive purposes, 19% in asset building and 43% for consumption purposes.
Table 2 Loan use of clients
Total #Loan Use% active clients (562)VB
Total(443) ID (119)VB

ID

Productive purposes

342

95

7780

Agriculture

120

33

272884

31

1933

47Animals
Fishing/commonresources
Manufacture% Total loans use (783)
VB (607)

ID (176)

Total

78

56

5456

27

20

1920

26

20

14

18

15

37525

property
30

5746534Petty Trade

246555434Services

51

15121312898

Asset buildings

7233

1628

19121913

Consumption Purpose

19348

444043322731

Debt

176454333Give Loan

1794853

53Food68

1215101411710Health54912811958

Celebrations

94232

122

Emergency needs

195444333

Other

93232122

Finally, approximately 16 percent of the AMK active clients (93 cases) reported having
difficulty in repaying AMK loan, mostly because of enterprise problems (no profit in businessactivity, animals have died or having problem with sales) (73%) and to a lesser extent for sickness
in the family (23%).
Are AMK clients satisfied with AMK products and services?
This issue is the crucial part of the article as the objective here is to assess whether clients are
satisfied with AMK products and services or not. Each client was allowed to name a maximum of
three reasons for satisfaction and dissatisfaction with AMK. Fig. 1 shows that clients are generally
satisfied with AMK: (a) more than 86% of the active VB clients and 94% of active ID clients
expressed at least one reason for satisfaction with AMK and (b) only 8% of the 459 active VB
clients and 17% of the 121 active ID clients had any negative feedback.
Also, the total numbers of positive and negative comments further confirm the general positive
attitude of clients towards AMK: households with positive feedback usually have more than one
positive comment while households with negative comments usually have only one comment. Nota single client cited three negative comments towards AMK. Finally, the total positive feedbacks
considerably outnumbered total negative feedbacks (748 vs. 37 for VB clients and 209 vs. 21 for
ID client households).

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IJERD – International Journal of Environmental and Rural Development (2010) 1–1Fig. 1 General Feedback of VB and ID clients
Table 3 shows that, generally, AMK’s clients reported being satisfied with AMK. The main
two sources of client satisfaction are the fact that AMK provided loan when needed or it was easy
and fast to get loan (200 comments for VB clients and 69 comments for ID clients) and that
AMK’s interest rate were moderate or lower (220 comments for VB clients and 38 comments forID clients). In addition, other positive comments included financing at the doorstep; satisfaction
with AMK staff; AMK products (installment [45 comments] and emergency loan [17 comments]
and End of Term [3 comments]); satisfied with AMK policies and regulations and because of AMK
helps the poor.

Table 3 Satisfactory feedback (ordered by importance)
VB

Description

ID

Total

#%

#%

#%

Provided loan when needed/Fast disbursement/easy to get loan

200456958269

48

Interest (moderate or lower)

220

50

3832258

46

Finance at doorstep

15335473920036

Like staff behavior

6314211884

15

AMK product [Installment=45 , Emergency loan=17, EoT=3)4510201765

12Good regulation/policy

33

74337

7Help the poor/kind

24522265

Other [loan size (10) , group(4), no pressure(3), loyalty(1)]1028718

3Total748

209957

Although only 11% of clients had any negative feedback, there were 64 negative comments, as
shown in Table 4. The main sources of dissatisfaction were the small loan size (10 comments forVB clients and 4 comments for ID clients) and slow disbursement (9 comments for VB clients and5 comments for ID clients) followed by high interest (only 1 comment for VB client while 5comments for ID clients) and strict policy (4 comments for VB client, 2 comments for ID clients).
Other negative comments cited included problems with AMK staff, or difficulty in getting aloan. A few clients were not familiar with repayment schedule and calculating interest or principle
payment, moreover the survey also found that they did not like installment method, required
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the great majority of clients were satisfied with AMK’s interest rate with 258 positive comments
versus 6 negative comments.

Table 4 Dissatisfactory feedback (ordered by importance)
VB

Description

ID#%

Small loan size

102.3

Slow disbursement

9High interest
Strict policy
Dislike AMK staff
Difficult to get loan/ask many questions
Irregular/strict repayment scheduleNot familiar with loan calculation(interest/principle)#Total%

#%

4

3.4

142.4

2.05

4.2

14

2.4

10.2

54.2

6

1.0

4

0.9

21.7

6

1.0

5

1.1

00.0

50.9

30.7

21.7

50.9

4

0.9

00.0

40.7

30.7

10.8

40.7

Hard to find group/group member require/need guarantee

20.5

10.8

30.5

Other [dislike installment, collateral , penalty /fee]

00.0

3

2.5

30.5

Total

41

9.3

23

19.3

64

11.4

Comparison of Client’s Satisfaction on AMK’s Product/Service and Competitors
Table 5 below shows the positive and negative feedback comparing between active loans with
AMK and active loans with other providers (this last one from both client and non-clienthouseholds).
Table 5 Main positive and negative feedback on AMK and other competitors (%)
Positive Feedback
Provided loan when neededInterest
Finance at doorstep
Like lender behavior
Loan product
Good regulation/policy
Help the poor/kind
Loan size
No interest

AMKVB ID
4448
33
14
10
7
51-

57
31
39
17
17325-

OtherVB ID
41
17542474
1737
13
3319613Negative FeedbackAMKVB ID

Other
VB ID

Slow disbursement
Small loan size
High interest
Strict policy
Difficult to get loan
Dislike lender
Far from village

2.0
2.2
0.2
0.9
0.7
1.1
-

0.4
9.0
0.9
0.9
0.9

4.1
3.3
4.1
1.7
1.7
-

11.8
1.5
4.4
1.5

AMK has a competitive advantage in three main fronts:
VB new client households:• Providing loans when needed or easy to get loan (44% for AMK loans vs. 41% to othersources).
• Lower interest rate than competitors (48% of positive feedback in AMK loans vs. 17% of
positive feedback from other additional loans sources, only 0.2% negative feedback for AMKloans vs. 9% negative feedback in loans from other loan sources). However about 17% ofclients in VB who get loans from other sources were satisfied with no interest charging.

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Providing loans at their doorstep: positive feedback 33% from AMK loan sources and 5%
from other sources and plus 1% of negative feedback for other loans because providers werefar from village.

ID new client households
Providing loans when needed or easy to get loan (57% for positive feedback to AMK loans vs.
37% to other sources, but 1.7% of ID clients for AMK loan vs. 1.5% for another loan sources
claimed that was difficult to get loans). Lower interest rate than competitors (31% of positivefeedback in AMK loans vs. 13% of positive feedback from other additional loans sources; 4%
negative feedback for AMK loans vs. 11% negative feedback in loans from other loan sources).
CONCLUSIONS
The main highlights of this article are the following: As many as 31 percent of new AMK clients in2009 have multiple loans simultaneously with other sources of credit, similar to the results found in2008 (33%) but higher than results in 2007 (28%) and 2006 (13%). The great majority of VB newand ID AMK clients reported using at least part of their loans for productive purposes, mostly infarm-related activities (agriculture and animal-raising). A little less than half of VB clients (44%)
and ID clients (40%) allotted part or all of their loans for consumption purposes (mainly food andmedical expenses).
AMK clients are generally satisfied with AMK. About 86 percent of VB clients and 94
percent of ID clients expressed at least one reason for satisfaction with AMK. The primary sources
for satisfaction are: the fact that AMK provides loans when needed or that it is easy to get loans,the interest rates are fair and AMK provides loan at their doorstep. Only 8% of group clients and
17% of ID clients had (at least) one negative feedback about AMK, mainly related to the small loan
size or slow disbursement or the high interest rate. Small loan size was most complained among
both VB and ID client households.
Finally, the study evaluated the strengths and weaknesses of current products and services andclient demand for new product/service offerings. Low interest, providing loan when needed andfinance at doorstep appeared as AMK’s competitive advantages by VB clients. For ID client
households, providing loan when needed, providing loan at their doorstep and low interest are alsoa crucial aspect of AMK’s competitive advantage to enlarge and retain clients.
ACKNOWLEDGEMENTS
This Clients’ Satisfaction study was made possible with the support of AMK and Research Team ofAMK’s Research Department.

REFERENCES
Nelson C. (ed.) (2000) Learning from clients, Assessment tools for microfinance practitioners. SEEP/AIMS,USA.
Woller G. (2005) Benefit of client assessment. SEEP Client Assessment Working Group, SEEP/AIMS, USA.
Torres, O. (2006, 2007, 2008) The clients’ satisfaction report. A Case study of AMK, Cambodia.

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