MICROCAPITAL STORY: Microfinance Down in Cambodia: Microfinance Institutions (MFIs) Reduce Loan Volume in First Half 2009

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The number of loans extended to clients by microfinance institutions (MFIs) declined during the first half of 2009 in Cambodia, according to an article in the Phnom Penh Post [1]. MFIs reported that they are being more cautious in their lending and clients are more nervous about taking out loans. Both factors are being attributed to the downturn in the global economy. The rate of non performing loans (NPLs) also increased during this period and the Cambodian Microfinance Association forecasts this to increase to three percent by the end of the year [1, 2]. A recent MicroCapital story discussed this trend and the increased credit risk rating that the Economist Intelligence Unit has assigned to Cambodia [9].

One Cambodian MFI, AMRET, advised that they had planned to disburse USD 50 million in loans during the first six months of the year, but had only lent USD 33.5 million to 230,000 customers [1]. Furthermore they reported an NPL rate of 2.8 percent at the end of June 2009 compared to 0.08 percent at the end of December 2008 [1]. PRASAC, another MFI, reported a reduction of 13 percent in loan disbursements from USD 38 million to USD 33 million during the first half of 2008 [1]. During the same period PRASAC’s client base decreased from 100,000 to 87,700 and the NPL rate increased from 0.23 percent to 1.35 percent [1]. A third MFI, SATHAPANA has also experienced rising NPL rates from 0.2 percent at the end of 2008 to 1.7 percent in June 2009 [1]. Furthermore, loans to clients were a third below target at USD 22 million [1].

AMRET, previously EMT, was founded in 1991 as a French non-government organization (NGO) and in 2001 received its MFI license from the National Bank of Cambodia [3]. AMRET reports to the MIX Market, the microfinance information clearinghouse; however only information pertaining to the year ended 31 December 2007 is currently available. Information as at 31 December 2008 has been gathered from the audited statements found on AMRET’s website. Total Assets at this time were USD 69.7 million and Gross Loan Portfolio was USD 54.2 million [3]. The total number of borrowers at the end of 2008 was 226,262 with 83 percent being women [3]. In November 2008 AMRET was given an ‘A’ rating by MicroFinanza rating company [3].

In 1995 PRASAC was established and in 2004 it received an MFI license. At this time it registered as a private limited liability company and its current shareholders are BIO (Belgian Investment Company for Developing Countries), DCG (Dragon Capital Group), FMO (The Netherlands Development Finance Company), LOLC (Lanka ORIX LEASING Company Ltd), and Oikocredit [4]. The latest information available is from the MIX Market for the year ended 31 December 2007. Total Assets were USD 37.5 million and the Gross Loan Portfolio was USD 34 million [5]. PRASAC had a Return on Assets of 6.04 percent and a Return on Equity of 15.53 percent [5]. There were 94,555 borrowers with an average loan balance of USD 359 [5]. Current rating information has not been made available.

SATHAPANA Limited was established in 1995 as Cambodia Community Building (CCB), and NGO, and in 2003 received its MFI license. The most complete information available on the MIX Market is for the year ended 31 December 2007 where Total Assets were USD 23.9 million [7]. At this time the Gross Loan Portfolio was USD 22.5 million and the number of active borrowers was 24,024 [7]. SATHAPANA had a Return on Assets of 6.26 percent and a Return on Equity of 31.06 percent for the same period. Rating information is not available. The current shareholders of SATHAPANA are CCB NGO (23.41 percent), ShoreCap International Limited (33.58 percent), Cambodian Entrepreneur Building Employee Company (CEBEC) (6.07 percent), FMO (18.47 percent) and Triodos (18.47 percent) [6].

The Cambodian Microfinance Association (CMA) was established in 2004 as an NGO [2]. It seeks to ensure all Cambodians receive financial services by supporting microfinance organizations to create networks and communicate with local and international donors. It reports consolidated information for 18 MFIs which includes the three MFIs discussed above. At the end of March 2009 CMA reported Total Loans Outstanding for the 18 MFIs of USD 275 million with over 828,000 borrowers and 105,000 savers [8]. AMRET is the largest MFI based on Loans Outstanding, followed closely by PRASAC and then SATHAPANA. SATHAPANA has the most savers of any MFI operating in Cambodia [8]. Several Cambodian MFIs have also received awards for financial transparency as awarded by the Consultative Group to Assist the Poor (CCAP) and reported by MicroCapital earlier this year [10].

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By Sally Levy, Research Assistant

Bibliography:

[1] The Phnom Penh Post “MFIs See Lending Growth Dip” by Nguon Sovan, 13 July 2009, http://www.phnompenhpost.com/index.php/2009071327096/Business/mfis-see-lending-growth-dip.html

[2] Cambodian Microfinance Association: http://www.cma-network.org/

[3] AMRET: http://www.amret.com.kh

[4] PRASAC Limited: http://www.prasac.com.kh

[5] MIX Market PRASAC: http://www.mixmarket.org/en/demand/demand.show.profile.asp?ett=1042&

[6] SATHAPANA Limited: http://www.sathapana.com

[7] MIX Market SATHAPANA: http://www.mixmarket.org/en/demand/demand.show.profile.asp?ett=1543&

[8] Cambodia Microfinance Association March 2009 information: http://www.cma-network.org/information.htm#

[9] MicroCapital Story, 19 May 2009: Cambodian Microfinance Institutions’ Non-Performing Loans Rise Again https://www.microcapital.org/microcapital-story-cambodian-microfinance-institutions’-non-performing-loans-rise-again/