The National Bank of Cambodia (NBC) and the International Finance Corporation (IFC) will join forces on the “Cambodia Supply Chain Finance Market Development” project and expand financial access for the Kingdom’s small and medium-sized enterprises (SME).
Rath Sovannorak, head of NBC’s General Directorate of Banking Supervision, signed a memorandum of understanding (MoU) to that effect on February 24 at a virtual signing ceremony to assist the government in its effort to improve the environment for private sector development, NBC said in an announcement.
“Having seen the importance of [SMEs] in national economic improvement, this project is fully aligned with the key priority of promoting innovative credit products for SMEs set in the National Financial Inclusion Strategy 2019-2025.
“The result of this project will serve as a pathway for policy-setting and improving [the] SME finance ecosystem in Cambodia through strengthening regulatory support, enhancing market knowledge and practice, and developing [a] favourable ecosystem,” it said.
Federation of Associations for Small and Medium Enterprise of Cambodia (FASMEC) president Te Taingpor told The Post that while financial institutions abound throughout the Kingdom, high collateral requirements are a major roadblock for SMEs to access financing for their business expansions.
“We welcome any development partners and international organisations that help our local SMEs, especially when it comes to funding. The greater part of our SMEs only receive limited sums as the size of collateral requirements from banks or microfinance institutions [MFIs] to access funds continues to grow.
“I hope that cooperation between our central bank and IFC will be a new milestone in setting simple requirements for our SMEs to get more funding,” he said.
The government – through Small and Medium Enterprise Bank of Cambodia Plc (SME Bank) with a $150 million capital investment – is making an effort to support the Kingdom’s SMEs and provide them with low-interest loans.
Early in April, the Ministry of Economy and Finance rolled out its SMEs Co-Financing Scheme (SCFS): a joint venture between SME Bank and 23 commercial banks, two specialised banks and seven MFIs – five of which are microfinance deposit-taking institutions.
SMEs can borrow $200,000 for working capital and $300,000 for investment capital, at a seven per cent annual interest rate and a four year period of payment, the ministry said. “The collateral depends on the criteria of the financial institution. All SMEs can apply for a loan but they must be registered with the ministry.”