Micro balance

The balance of microfinance savings to lending over the past four years:

• 2008 +$54 million
• 2007 -$120 million
• 2006 -$121 million
• 2005 -$85 million

Source:

Cambodia Microfinance Association

$32m

drop in microfinance lending.

Figures released at last week’s Banking Cambodia 2009 conference showed that Cambodian mircrofinance lending fell to $438m in 2008 from $470 million in 2007.

MICROLENDERS reported slower loan growth in 2008 at the Banking Cambodia conference last week, adding that a stronger deposit base would put the sector on a solid footing for 2009.

Hout Ieng Tong, chairman of the Cambodia Microfinance Association, said loans declined to US$438 million in 2008 from $470 million the previous year, speaking at the banking event Friday.

"The global financial crisis left microfinance institutions (MFIs) without enough funds from overseas and local lenders," he said.

"Portfolio at risk is still very low - 0.67 percent, equivalent to $2.95 million," he added.

Savings grow

Savings outstripped lending for the first time, however. Hout Ieng Tong said that a stagnant real estate market had encouraged more savings, with deposits reaching $492 million in 2008, up from $350 million in 2007.

"The increase is probably because people no longer want to invest in real estate," he said.

Hout Ieng Tong said the number of borrowers hit one million last year from 970,152 in 2007, and depositors rose to 529,789 last year from 355,956 in 2007. Eighty-one percent of borrowers are women, he said.

"However, there is huge room to grow because the percentage of borrowers and depositors at MFIs is still relatively low - 10 percent of Cambodia's population of around 14 million," he said.

Neav Chanthana, deputy governor of the National Bank of Cambodia, said the MFI portfolio is sheltered from risk.

"Banks and microfinance institutions are growing despite the global financial crisis," she said. "As you see, non-performing loans are very low - less than one percent - it is unbelievable. This shows how good our farmers are. Once they borrow the money, they work hard and are committed to repaying."  

Microfinance institutions are growing despite the global financial crisis.

Some institutions also saw increased lending despite the general downward trend. The general manager of Amret Microfinance Institution, Chea Phalarin, said its loan portfolio increased 80 percent in 2008 - to $54 million from around $30 million in 2007. "The global economic downturn has not affected the loans we offered last year," he said, adding that growth was due to strong rural demand for micro businesses, especially in the agricultural sector. "Despite the global downturn, we expect to see 50 percent loan growth this year."

Interest rates range from 24 to 36 percent per year, according to the industry.

Mom Vanny, from MFI Cambodia Health Committee Ltd, said Sunday its loans were $4 million in 2008, up from $3 million in 2007.

"Early this year, we suspended loans to customers due to the crisis," he said. But, he continued, "This year we plan to increase loans by 50 percent and will set up two more operational offices."

"In 2009, we will require external financing of around $4 million," he said, "But due to the crisis, we expect to get only $2 million."