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Banking and Micro-finance
Microfinance and Banking Program

An effective poverty reduction strategy

SIDO in Cambodia is always regarded village banking and microfinance one of the most effective and flexible strategies in the fight against global poverty. It is sustainable and can be implemented on the massive scale necessary to respond to the urgent needs of those living on less than $1 a day, the World’s poorest.

Motha Vanna, Battambang
Village banking in group discussion

Village banking and Microfinance consists of making small loans, usually less than $200, to individuals, usually women, to establish or expand a small, self-sustaining business. For example, a woman may borrow $50 to buy chickens so she can sell eggs. As the chickens multiply, she will have more eggs to sell. Soon she can sell the chicks. Each expansion pulls her further from the devastation of poverty.


SIDO’s way includes several support systems that contribute greatly to its success. It offers business advice and counseling, while clients provide peer support for each other through solidarity circles. For example, if a client falls ill, her circle helps with her business until she is well. If a client gets discouraged, the support group pulls her through. This contributes substantially to the extremely high repayment rate of loans made to microfinance entrepreneurs.

An equally important part of village banking and microfinance is the recycling of funds. As loans are repaid, usually in six months to a year, they are re-loaned. This continual reinvestment multiplies the impact of each dollar loaned.

It has a positive impact far beyond the individual client. The vast majority of the loans go to women because studies have shown that women are more likely to reinvest their earnings in the business and in their families. As families cross the poverty line and micro-businesses expand, their communities benefit. Jobs are created, knowledge is shared, civic participation increases, and women are recognized as valuable members of their families and communities.

Village banking and Microfinance Program Support

Building strong village and its institutions

Ranging in size from just a few clients to hundreds, our partners whom work with microfinance are the bedrock of our outreach to the poor. Our success is intricately tied to their impact and performance. As the demand for village banking and microfinance increases, these front-line services must be able to adapt to the changing needs of the communities they serve. To help them operate more efficiently and be more effective, we provide each partner with financial products and services that are tailored to meet their needs.


Drawing on the skills and expertise of our in-house professionals and a pool of consultants, we work with individual and partners to develop a comprehensive technical assistance package, including:

  • financing strategies that foster smart growth
  • training and capacity-building project that help to expand and strengthen day-to-day operations
  • outreach initiatives that increase their visibility both in local and international communities

To be more effective, SIDO must also know how their products and services are helping their clients to escape poverty.  We are helping them measure their Social performance with its Progress Out of Poverty Index.  It allows partners to better determine their clients’ needs, which programs work best, how quickly clients leave poverty, and what helps them to move out of poverty faster. It builds on previous efforts within the industry to measure and manage social performance and is available to SIDO partners, as well as those outside the network.

Technical Assistance to Partners

Due to Village banking and Microfinance are dedicated to alleviating poverty by offering financial services to the poor, including loans, savings accounts, micro-insurance, and money transfers. Most of them are also integrating other social empowerment strategies into their operations, including healthcare and nutrition, financial literacy, and environmentally-friendly technologies, such as solar energy and biogas. Such strenuous programs and innovations require constant growth in skills and capacity.

SIDO is committed to assuring the success of our works and partners in reaching out to more of the world’s poorest people and ensuring that those clients get out of poverty quickly. We look to the village Banking as a model in piloting new approaches to leveraging the microfinance infrastructure to promote accelerated poverty reduction.

Innovative financing solutions and strategies to expand the capacity and efficiency of our partners provide a direct impact on the lives of the poor, and advance the microfinance industry as it moves toward even higher standards in terms of anti-poverty impact and financial performance. SIDO’s success is intricately linked with the success of our work, partners and ultimately, the clients accessing microfinance.

We have developed a track record of our direct work and helping our partners:

  • Effectively target the poorest of the poor and women.
  • Utilize cost-effective tools to measure progress out of poverty for existing clients, thus advancing the goal of developing standards and metrics for social impact performance.
  • Increase efficiencies in the delivery of financial services.
  • Achieve full cost-recovery and profitability, and utilize profits to provide better and more economical services to clients.
  • Use microfinance as a platform for broad social change by delivering a wider array of financial and non-financial products and services in pursuit of poverty alleviation.

Our Technical Assistance Project offers a variety of products and services to our partners LNGOs and CBOs, village banking to help them reach these goals.

Technical Assistance Project

As a leading microfinance network serving many members of SIDO family of organizations around our target locations, SIDO impacts the lives most of families through its partners in 24 towns and provinces in Cambodia, Lao PDR and Vietnam. In addition to providing loans, grants, loan guarantees and equity, we provide technical advisory services with the following objectives:

  • We provide technical assistance customized to each Partner’s needs, from those in the start-up phase to mature, large organizations, with a focus on promoting sustainable expansion, enhanced anti-poverty impact, and breakthrough applications of technology.
  • We offer our network of partners pioneering financing strategies and creative information technology solutions, always moving them toward access of commercial capital.
  • We are committed to making our tools and learning, and those of our partners, available to the wider microfinance movement, through adhering to an “open source” philosophy of sharing successful strategies.

SIDO with self-work and we helps partners as they move through stages in their lifecycle. Each approach has a set of unique characteristics that typically shapes the types of products and services we provide.



Goals of SIDO Support



Mature village banking and microfinance with strong financial and operational track records. Most are regulated.

Support the institutions to improve efficiency, expand the geographic breadth of program and the depth of program to reach all levels of poor, especially the poorest, with a wide portfolio of products and services.



Successful yet smaller, younger, or simply less well-known village banking and microfinance that are at or near profitability. Mostly NGOs considering conversion.

Support the institutions to become sustainable and profitable, to expand in scale, and to transform into regulated entities.



Village banking and microfinance approaching profitability yet have a lack of capital, a weak MIS, or other needs. Nearly all are NGOs.

Support the institutions to improve capacity, build systems, establish policies and procedures in line with sound practices, and diversify sources of capital.



Start-ups or village banking, microfinance operating in post-conflict/post-disaster settings.

Support them to set up a village Banking and microfinance project suitable to its context, focusing on making financial services available to the poor.

SIDO works and assists our partners with this evolution through our Toolbox of relevant products and services.

SIDO Toolbox

SIDO works with its partner village banking and microfinance at each stage in their lifecycle, providing a tailored group of financial products and technical assistance services that help them achieve sustainable growth and, in the long-term, become strong village banking and microfinance project reaching large numbers of very poor clients. Because we possess a solid group of in-house technical support staff and a pool of well-qualified consultants, we are able to create a unique strategy for each partner. We draw on this network to provide the necessary training, capacity building, and exposure to the international and financial community. Our products and services include:

Financial Products to fuel smart growth and help in creating relationships with investors

  • Includes loans, guarantees, and equity
  • Can be subsidized or unsubsidized

Technical Assistance to build the capacity of the organization

  • MIS automation
  • Business planning
  • Treasury management
  • Internal controls
  • Financial management
  • Social Performance
  • Technology Consulting

Peer Learning to increase dialogue and experience sharing across village banking and microfinance.

  • Participation in SIDO Dialogue programs (12-day intensive training seminars on microfinance best practices organized every three to four months by SIDO Village Banking and SIDO Expertise.
  • Exposure trips to village banking and other relevant microfinance institutions that have emerged as centers of excellence in areas important to SIDO and its partners

As this grows and increases its scale, its ability to cover costs through its own income increases. At that point, SIDO supports its evolution into a more sustainable village banking by:

  • Providing products and services at, or close to, market rates.
  • Shifting subsidy from products and services that support day-to-day operations to products and services that support rapid expansion. The ultimate goal is to phase out the subsidy.

Social Performance Management

Equipping village banking and microfinance to measure their clients' progress out of poverty

A goal of SIDO’s work is to ensure our program and partners’ programs are moving the clients out of poverty after six years and to foster good practices for measuring the progress of individuals’ movement across poverty lines.

The village banking and microfinance of partners must show results, yet many do not have the tools to evaluate how well they are fulfilling their mission of reducing poverty, reaching people excluded from financial services, empowering women, or promoting community solidarity. SIDO’s Progress Out of Poverty Index is designed to fill that need. Built on the learnings of previous efforts in the village banking and microfinance industry, the PPI shows great promise.

Technology Programs

Why Focus on Technology?

Technology increases the efficiency of village banking and microfinance, eventually resulting in lower interest rates to borrowers and new loan programs that attract additional clients and expand opportunities for the Village Banking and microfinance and the borrower to become self sufficient. We are transforming the village banking and microfinance program through innovations and collaborations that improve the delivery of financial services to the poor and integrate microfinance with the global financial system.

Information and communication technology (ICT) provides unparalleled opportunities to improve the lives of the world’s poorest people. It can create jobs, improve access to health care, education and other services, and connect far-flung communities to each other which can boost local economies. However, without a conscious effort to develop and champion breakthrough applications of ICT to reduce global poverty, its potential can go unrealized.

Future Plan:

SIDO will build its own Technology Center, an initiative of Group Founders, was inspired by some of the early successes of technology-oriented some companies in Bangladesh and other places. The Center will leverage the power of village banking and microfinance and technology to create innovative and sustainable solutions that will enable village banking and microfinance to empower their clients to escape poverty more rapidly. It focuses on technology that:

  • makes microfinance operations more efficient
  • creates income-generating opportunities for the rural poor
  • provides poor communities access to information and resources

"An individual poor person is an isolated rural area by himself and herself. IT can end that isolation overnight."

With this respect, Information and communication technologies have a real impact on social development and are continuously advancing. SIDO is going to making a significant impact on communities around its target groups and locations by channeling and adapting technologies developed by the private sector and putting them to work for the village banking and microfinance movement. We will invite you to explore these pages to learn more about SIDO Technology Center’s technology focus in the near future about its Advisory group and Partnerships, and how our products and projects are changing lives around where we work:

  • Our Mifos Initiative is building village banking and microfinance software that will improve village banking and microfinance efficiency and serve as a universal platform for further innovation.
  • Village Phone uses village banking and microfinance to bring much-needed telecommunications to the remote area rural poor.
  • Village Phone Direct is a village banking and micro franchise approach to Village Phone that allows village banking and microfinance to directly and independently develop a Village Phone Product for their clients.
  • Application Laboratory seeks to expand the power of existing technologies to serve the poor.
  • Our Partner Technology Support team provides a full range of technical assistance, consulting, assessment and advising services for our village banking and microfinance partners' Management Information System (MIS) needs. The Partner Technology Support team has also produced an MIS Toolkit to help guide village banking and microfinance countrywide and regional wide in their information systems projects.

The Mifos Initiative

Mifos, Technology that Empowers Microfinance

Software developer?

Mifos is an industry-wide initiative to address the microfinance industry's information management challenge. Using the open source paradigm, we are creating a new service model that will increase access to technology for all village banking and microfinance, ultimately enabling them to extend their reach to the world’s poor.

At the center of the initiative is the Mifos product, a freely available world-class management information system (MIS) that provides the core functionality required by village banking and microfinance. The flexibility and scalability of the product means that we will be able to simultaneously standardize common processes, accommodate regional variations, and scale for new innovations in the future.

How does software help the Poor? By equipping village banking and microfinance to serve them better through:

  • Lower transaction costs
  • Faster transaction processing
  • Up-to-date information for loan officers
  • Less paperwork
  • Automatic calculations that lead to less human error
  • Reduce risk of fraud

SIDO’s Technology Center will be providing the initial leadership and investment for Mifos. However, we are committed to making Mifos an industry-wide initiative and will invite you to join with other village banking and microfinance, IT professionals, software developers, and industry leaders worldwide and become part of the Mifos community. It is only with the participation and collaboration of all of us that Mifos can fulfill its potential and have a truly revolutionary impact.

With Mifos, the microfinance industry as a whole not only benefits from the
technology, it contributes to it, improves it, and owns it -

Village Phone: Connecting Technology and Innovation

Access to affordable telecommunications simply does not exist for millions in the developing world. For some, placing a phone call can require traveling over several miles from their homes. This can mean leaving work and losing out on desperately needed income. Cut off from easy access to communications, these communities are at both an enormous economic and social disadvantage.

Based on the pioneering work of SIDO in the future, Village Phone and Village Phone Direct extend the benefits of affordable telecommunications access in a sustainable, profitable and empowering way. This relatively inexpensive technology can solve many of the problems the poor in rural villages have faced for decades. SIDO will serves as a catalyst and creates the linkage between the telecommunications sector and the microfinance sector to enable microfinance clients to borrow the money needed to purchase a “Village Phone business” – literally, a business in a box. These grassroots entrepreneurs, or Village Phone Operators (VPOs), operate their businesses in rural villages where no telecommunications services previously existed; they rent the use of the phone to their community on a per-call basis. The VPOs provide affordable rates to their patrons while earning enough to repay their loans and earn profits that allow them to make investments in their children’s health, nutrition and education, and in other business ventures.

Village Phone allows everyone to benefit. VPOs have strong, thriving businesses. Village banking and Microfinance institutions provide financial services and earn income on the loan interest, as well as commissions from the sale of prepaid airtime cards to their clients. They also attract new clients who are drawn by the opportunity to start a technology-oriented business. Telecommunications companies we partner with benefit by tapping a new market while at the same time furthering their social responsibility objectives. More importantly, individuals living in rural communities gain access to affordable telecommunication services linking them to their friends, family, business contacts and the world.

Village Phone allows everyone to benefit. Village Phone Operators have strong, thriving businesses.

To spur a global movement to provide telecommunications access for the world's rural poor, SIDO will author a Village Phone Replication Manual, the first step-by-step guide for replicating the expecting successful program in other developing countries. It draws on the pioneering work of SIDO Telecom in Cambodia where Village Phone will first begin.
Village Phone has become recognized as a solid business model for reaching rural populations. It is also acknowledged as a sustainable development tool by governments and development agencies such as the World Bank, the United Nations, the International Finance Corporation and USAID if this will be in place practice in Cambodia.

Frequently Asked Questions About Village Phone Direct

What is Village Phone?

Village Phone brings affordable telecommunication access to the rural poor in a way that is both sustainable and profitable. Through for-profit and non-profit partnerships, Village Phone links the telecommunications sector with the microfinance sector to enable microfinance clients to borrow the money needed to establish a Village Phone business in their rural communities. These grassroots entrepreneurs, Village Phone Operators, then rent the use of the phone on a per-call basis providing both affordable telecommunications access in their community while earning enough to repay their loan and raise their level of income.

What is Village Phone Direct?

Village Phone Direct is an approach to the Village Phone model that allows virtually any microfinance institution to directly develop a Village Phone product for their clients and to select the local telecommunications provider to purchase the pre-paid vouchers. SIDO will partner with Nokia to make a “Village Phone Equipment Kit” available for purchase in developing countries. Microfinance clients can purchase this kit through their microfinance institution, by taking out a loan which will be repaid with proceeds from the business. The client is now a Village Phone Operator and rents the use of the phone on a per-call basis to people in their community. The program is described in detail in SIDO “Village Phone Direct” manual.

Why is Village Phone Direct necessary?

In many countries, telecommunications companies have not defined a public access strategy for rural markets. In this case, Village Phone Direct allows a Village banking and MFI to bring mobile communication services and new business opportunities to their clients and select the local telecommunications provider. Furthermore, Village Phone Direct can be implemented in situations where the national infrastructure – mobile signal coverage, breadth and strength of MFI sector – may not be sufficient to support a more comprehensive, national Village Phone approach.

How is Village Phone Direct different from “Traditional” Village Phone?

In a “traditional” Village Phone program, a telecommunications company makes a concerted effort to target the rural market nationwide and creates partnerships with multiple local microfinance institutions to target rural clients. The telecommunications company allocates staff, defines the brand, invests in support services, and sets the pricing.

Village Phone Direct uses existing mobile communications products and does not require the full engagement of the telecommunications company. The Village banking and Microfinance institutions directly implement the program, define the local marketing strategy and control all aspects of implementation.

Do you recommend “Traditional” Village Phone or Village Phone Direct for my country?

SIDO’s ideal is to have a traditional Village Phone program in every country given the strength of the model to sustainable provide affordable telecommunication access in poor, rural communities. However, the reality is that not all markets are ready for the traditional Village Phone program. Village Phone Direct allows village banking and microfinance institutions to provide a much needed, and indeed profitable, mobile communications product to their clients and select from which local telecommunications provider to buy the pre-paid vouchers. It also enables village banking and microfinance institutions to implement small-scale programs in targeted areas of the country.


Is Village Phone Direct designed for urban or rural markets?

The equipment used in Village Phone Direct will operate in either an urban or rural market. However, we strongly encourage a focus on rural markets. In urban areas, there is usually significant competition for public telecommunication services, making the business more challenging for the microfinance client. In rural areas, especially those where a signal can only be received using the external antenna in the Village Phone Equipment Kit, the business model will be much more favorable and sustainable.


What equipment is in the Village Phone Direct kit?

This “business in a box” includes:

  • Nokia mobile phone with earpiece
  • External booster antenna for areas without strong mobile signal coverage
  • Custom designed cables to connect the phone to the antenna and the recharging

            equipment such as a automobile battery or a solar panel

To complete the Village Phone Equipment Kit for the microfinance client, a SIM card and prepaid airtime will also be needed and can be purchased through regular outlets. Additional items such as signage and marketing material may be produced by the village banking and microfinance institution.

How much does the kit cost?

The Village Phone Business Kit´s price depends on the local prices and taxes and whether the external antenna and/or charging equipment is needed. Village banking and Microfinance institutions can add additional items (such as signage and marketing material) and independently determine the price for their clients.

What will the program are called in my country?

Each village banking and microfinance institution can define their own local name for the product.

Is the Village Phone Direct kit sold exclusively to village banking and microfinance institutions?

The equipment will not be sold exclusively to microfinance institutions. However, microfinance institutions have an inherent competitive advantage in rural markets given their extensive networks, longstanding community relationships, and ability to provide loans to finance these Village Phone businesses.

What do I need to start a Village Phone Direct program?

The first and most important step is to read the detailed Village Phone Direct manual from SIDO. This document will have been created by the experienced Village Phone team at SIDO's Technology Center to help you assess the viability of Village Phone Direct for your organization, clients, and particular environment and guide you through the process of establishing Village Phone Direct as a successful product in your portfolio. SIDO and its partners, who hopes to be as a leader in and champion of the replication of the global replication of Village Phone is also available to assist you in your efforts.

The basics steps outlined in the manual are:

1. Make an institutional commitment to the program including allocating staff
2. Survey to assess demand and create business model.
3. Determine final components and sources for items in the Village Phone Equipment Kit
4. Procure all items and set pricing for the Village Phone Equipment Kit and corresponding loans
5. Educate clients about the program
6. Conduct pilot program
7. Refine operational processes and business model
8. Expand the program to all clients

Who are your supporters?

Our major supporters include Nokia, the International Telecommunications Union, Group Founders and other donor countries.

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