Blog

Durbar Marg, Kathmandu, Nepal, June, 18 2010 - The Asian Development Bank (ADB) Friday approved $72 million, which includes $ 60.4 million loan and $12.1 million in grants, to Nepal for programmes aimed at providing access to poor and isolated rural communities to credit and financial services. The cluster programme is targeting an increase in credit access to the rural poor from 1 million accounts in 2008 to 1.17 million by 2012 and an increase in women's access to finance from 200,000 accounts to 283,000 over the same period, ADB said. ADB further said that the cluster program aims to remove obstacles to credit access in rural communities by carrying out institutional and policy changes designed to make rural financial institutions more willing and able to provide credit and services to those in need. "The policy and institutional reforms under this phase of the program will transform key rural financial institutions into viable finance intermediaries with a strong client orientation and pro-poor focus, while improving the efficiency and outreach of semi-formal institutions," said Mayumi Ozaki, Finance Specialist, Rural and Microfinance, in ADB's South Asia Department.

During the last 35 years Cambodia has been plagued by civil wars and changes in political leadership. This turmoil has affected all areas of the country’s social and economic infrastructure, including that of the banking industry.

As most Cambodian families live at a subsistence level they lack the cash flow to meet basic human needs such as health care, children's education and resources to secure adequate food. Almost every one in four households are female-led and usually include at least two children. These families are particularly vulnerable, as the women generally have little or no formal education, and no land or productive assets.

The poor’s vulnerability to financial shocks or the sudden need for large, unexpected outlays of funds is one of the core aspects of poverty.¹ In Cambodia, there are presently about <30> commercial banks, <mostly> limited to servicing larger businesses in the urban areas. Many of the poor, especially in remote villages, rely more on traditional sources of credit such as family and friends, employers, merchants and village moneylenders who charge up to 10-20% in interest per month. These high interest rates charged by local moneylenders can make loans very expensive and some of the poor families cannot pay back the money borrowed. Instead they are often forced to pay in other ways, such as:

* taking their children out of school to go work for the moneylenders
* giving their children away to repay their debt, or
* selling their homes and land.

It is estimated that only 12% of the population has access to formal and semi-formal sources of credit provided through some 83 NGOs (Non Government Organizations) and semi-formal financial institutions, including VisionFund Cambodia. Meanwhile, market demand for microfinance is estimated to be US$100-125 million.² In addition there are virtually no micro savings services available to encourage poor families to build their own asset base for responding to family emergencies or external shocks such as natural disasters.

It is expected that the number of microfinance institutions (MFIs) in Cambodia will continue to grow, fueling more competition. This competition will ensure that banks and MFIs will continuously develop their products and services to adequately meet the needs of the poor.

Sources

¹World Development Report 2000/1 (updates/inserts shown in < > )
²National Bank of Cambodia December 2005

Blog

This Page will bring you to see " About Cambodia, MFI in Cambodia, Economic News and Exchange Rate Page "

About Cambodia

Cambodia: key facts

Size:

181,035 square kilometers

Capital:

Phnom Penh

Population:

14,494,293 million(2010 est); 80% live in rural areas whilst the remaining 22% are in urban or peri-urban areas¹

Per capita income:

Approx US$343¹

Poverty levels:

Over 31% of people are living under the poverty line earning less than US$1 per day²

Life expectancy:

62.1 years old¹

% total pop malnourished:

36.10%

% of children under 5 malnourished:

47%

Infant mortality (per 1,000 live births):

122

Literacy (15 years+):

63.8%¹

Agricultural production (%GDP):

29%¹

Agricultural labor force (% total):

67.9%³

Access to market:

Only 30% of the population have access to formal or semi-formal sources of credit¹

No. of commercial banks:

24¹

Semi formal lending:

831¹

Recent history

Mid-1960s-mid-1990s: 30 years of war and social turmoil when opposing political factions generated skirmishes across the country. In 1975, the Khmer Rouge took power, instigating brutal experimental policies under which nearly 2 million people died.
In the 1980s, the Khmer Rouge and other factions waged war with Vietnam along the Thai-Cambodia border; a civil war between Khmer Rouge remnants and central authorities followed in the 1990s.
In 1993, Cambodia held its first general election. In 1998, a second general election was held, which produced a coalition government whose efforts at cooperation have helped establish relative peace and stability.
Cambodia is still considered to be one of the poorest countries in the world but new political stability has brought the hope for a better future.