Cambodian Microfinance in Agriculture
Issues and Challenges
Cambodia Demographic and Microfinance
Industrial Data – June 2013:
Population: +14 millions
Estimated population below poverty line: 20%
Rural population: about 11 Millions
Number of MFIs: 37
Loan outstanding: USD 1,088 Millions
Deposit balance: USD 378 Millions
Number of active MFI borrowers: 1,398,056
Number of active depositors: 969,523
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Phases of Microfinance Development
1990 – 1995: Start-up Phase
1995 – 1999: Government-Supported
1999 – Present: Commercialization and
In early stage, MFIs in Cambodia have shared more
or less similar mission and vision brought from
their former status of NGO to licensed and
The main theme of their mission and vision have
been driven and dedicated to social and economic
development in rural area whereby it serves as a
contributing factor for the Government’s goal of
Issues and Challenges
Legal Framework limiting the ability of MFIs to diversify
products and services.
High Cost of Fund - High cost of fund prevents MFIs from
achieving their potential in helping to develop the rural
economy as well as the country as a whole.
Multiple Loans - The prevalent of multiple lending,
whereby an individual has taken out loans from more than
one MFIs, has reached a strenuous point.
Lack of a thorough credit assessment as many farmers
don´t have a credit history, no bank accounts, and
insufficient financial management capacity of the farmers.
Multiple land titles – Multiple land titles for the same land
lot to villagers continue to be issued and duplicates are
provided as collateral for loans to multiple MFIs.
High transaction costs due to geographical dispersion of
clients and poor infrastructure.
Staffing Issue - Difficulties in finding, hiring and keeping
well trained staff who is willing to work in a rural region.
Absent of Risk Transferring Tools – Both agriculture
guarantee and credit insurance yet to be implemented to
address production risks faced by famers as well as
credit risks faced by Financial Institutions.
Oversaturation - Some regions are experiencing an
oversaturation of MFIs, with the ration of MFIs to
population having reached a point where MFIs are facing
increasingly unfair competition.
And Finally ……..
For MFIs to achieve their potential to serve more
clients, they need to be able to offer a wider range of
products and services, and to reduce their cost of
funds so as to remain commercially sustainable, while
serving the lower end of the market.
Providing a legal framework that would enable MFIs to
offer more products and services would help generate
further growth in the sector, and to improve access to
finance for many more Cambodians.