Microfinance Sector’s $5.12 Billion Loan Impact in 2023
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In 2023, the microfinance industry played a crucial role in supporting economic activities by extending a collective $5.12 billion in loans to approximately 1.57 million clients, with an average loan value of $3,260 per client. This significant financial contribution not only facilitated the growth of numerous small-scale businesses but also generated 21,567 direct job opportunities across the country, with the industry’s presence marked by 904 offices nationwide.
Kaing Tongngy, the spokesperson for the Cambodia Microfinance Association (CMA), provided insights into the sector’s performance, indicating a consistent level of stability within the industry despite a lack of substantial growth. According to Tongngy, the latter half of the year witnessed a slight decline in both the volume of credit extended and the demand from customers, yet the sector remains a pivotal element in the national economy, offering a wide range of financial services including loans, savings accounts, and various payment solutions to people from all income brackets.
The annual report from CMA highlighted that the microfinance sector, excluding contributions from traditional banking institutions, has been instrumental in providing substantial financial support to over a million customers, and in doing so, has employed a significant number of Cambodians, with women making up 30% of the workforce within these institutions.
In discussions with the Khmer Times, Tongngy emphasized the dual nature of loans as both a potential means for economic advancement and a source of financial pressure. He advised borrowers to apply their loans judiciously to enhance their business operations rather than letting the borrowed funds become a financial strain. Tongngy also cautioned against the pitfalls of borrowing from informal sources due to their exorbitant interest rates and lack of consumer protection.
Furthermore, the report detailed that the four Microfinance Deposit-Taking Institutions (MDIs) in Cambodia managed to attract $2.2 billion in deposits from around 2.01 million clients by the year’s end. These institutions, all headquartered in Phnom Penh, are crucial players in the microfinance landscape, providing essential banking services to a broad client base across the nation.
Source: Khmer Times
