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Loans will come, even as the water rises

A man wades through floodwaters to retrieve possessions from his home in Kandal province during nationwide floods last October. Photograph: Heng Chivoan/Phnom Penh Post

AFTER experiencing decades of floods, Cambodia’s microfinance institutions say they no longer have problems disbursing loans during the rainy season, according to the head of Cambodia’s Microfinance Association (CMA).

A survey issued early this year by a coterie of international aid organisations, including Oxfam, Care, PACT and CRS, showed that about 400 households were affected by the floods last year. It said before the flood, nearly two-thirds of the families took some debt from microfinance institutions and unofficial lenders.

Because of flooding, about 48 per cent of families took an additional loan worth an average of approximately US$635. Of those families more than 56 per cent are expected to earn less than $500 this year. About 60 per cent of households said they had some difficulty in repaying those loans and six per cent said they will not be able to repay their loans at all.

During the closing of the annual meeting of the Ministry of Rural Development, Prime Minister Hun Sen called for all Cambodia’s MFIs to help the victims.

Bun Mony, head of the CMA said flooding is hardly a new phenomenon to Cambodia and the people are aware and generally well prepared against any losses. “In fact, the flood is no stranger to us.”

“We will not reduce or suspend the amount of loans to the sector. Although the risk is there, we always caution all MFIs and customers to be well prepared against such natural disasters – not only floods,” he said.

“We are still trying to disburse our loans as much as we can, especially to the agricultural sector, which is our first priority and it is required of us to support the government’s target. Moreover, it is an opportunity for farmers to expand their farms, and it is our opportunity to grow. We’re not too worried about the floods,” he added.

Preah Vihear, Siem Reap, Banteay Meanchey, Kampong Thom, Kratie are the most vulnerable provinces, he said.

Sim Senacheert, president and CEO of Prasac Microfinance Institution, echoed Bun Mony’s sentiments. “Actually, we don’t have any plan to reduce our loans in those areas, because most of the customers clearly understand the flood season. So they will know what they are going to farm during that flooding period.”

“We are not worried. We will still do our job,” he added. “During the flooding period, we provide a lot of loans to the agricultural industry. It will not push our nonperforming loans rates up. We were not affected by last year’s floods, as one can see as our nonperforming loans rate declined,” he continued.

As of June 2012, PRASAC provided loans to 119,200 active borrowers with more than $165 million in loans outstanding. There were 68,300 depositors with more than $19 million in deposits.
However, not all MFIs are so nonchalant.

Chea Phallarin, president and CEO of Amret Microfinance, raised a concern. “We already set a plan during that period to not disburse our loans too much to those in flood affected areas. We are carefully watching the levels of flood waters because it normally rises significantly before Pchum Ben.”

To contact the reporter on this story: May Kunmakara at



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