BY BUTH REAKSMEY KONGKEA
About 1.5 million Cambodian families who live in rural areas and provinces use private microfinance companies to operate their own business activities in Cambodia, according to Huot Ieng Tong, President of Cambodian Microfinance Association (CMA).
Tong said that most of the typical microfinance clients are poor and low-income people that do not have access to formal financial institutions in Cambodia. He said that they are usually self-employed and household-based entrepreneurs or businesses.
Cambodia has a diverse array of microenterprises – small retail shops, street vendors, artisan manufacturers, farmers and service providers – where the business owners, known as “microentreprenuers” engage in low income-generating activities such as food processing and trade.
“The reason why many Cambodian people have decided to use our private microfinance institutions because they did not have accessibility to the state banks or other financial microfinance institutions in Cambodia,” he said during the opening remarks of the CMA’s annual conference on March 5 in Phnom Penh.
During the past 16 years, Cambodia’s microfinance system had improved. It received interest and support from national and international circles because it helped provide effective financial services to poor people and contributed to poverty reduction and development in Cambodia, according to Ieng Tong.
He said that the progress of the Cambodia’s microfinance system honors the nation’s reputation and much of the improvements can be attributed to the peace and political stability provided by the leadership of Prime Minister Hun Sen. since the establishment of the CMA in 1992, a total of 1,019,851 people, 81 percent of whom are women, borrowed the money from the CMA. In addition, 529,789 people used their saving money with CMA.
According to CMA’s report 2008, there are about 18 private microfinance institutions operating in 24 cities and provinces across the Kingdom of Cambodia.
Bun Mony, General Manager of Entrepreneur Building Limited, a private microfinance service and a member of the Cambodia Microfinance Association in Cambodia, said private microfinance institutions play an important role in developing Cambodia by providing financial services or loans to small business owners. They also provide more jobs opportunity for people and contribute to poverty reduction and help boost the national economy by providing financial resources with lower interest rates.
Mony said that according to a report from 2008, most businesses that borrowed the money from his association succeeded and their living-conditions improved.
He said more than 99 percent of borrowers were able to pay back their loans on time and they continued to take advantage of the association’s financial services. So far, a total of US$740 million had been lent to people in Cambodia, amounting to US$492 million in savings with CMA.