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CAMBODIA RURAL FINANCE

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CAMBODIA RURAL FINANCE PRASAC overview Feb 2013, Thailand CONTENT About Cambodia. Cambodia MFIs Evolution and Performance. PRASAC Overview. Conclusion and Development ... – PowerPoint PPT presentation

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Title: CAMBODIA RURAL FINANCE


1
  • CAMBODIA RURAL FINANCE
  • PRASAC overview
  • Feb 2013, Thailand

2
Content
  1. About Cambodia.
  2. Cambodia MFIs Evolution and Performance.
  3. PRASAC Overview.
  4. Conclusion and Development Plan.

3
About Cambodia
4
About Cambodia
  • Good strategic location.
  • Area181,035 sq km, about twice the size of South
    Korea Thailand on its west, Vietnam to the East
    and Laos on its North. It located in the middle
    of south east nation countries.
  • Population 13, 395,682, Total Households
    2,832,691, Rural HHs 2,314,548 (82)
  • Average HH size 4.7, Population in agriculture
    72.3 (Census 2008)
  • GDP/capita USD795 (IMF 2010), USD 677 (WB 2009)
  • GDP Amount USD 9,872,222,155-WB 2009
  • Life Expectancy 61 year (2008)WB, Literacy rate
    (adult 15) 78 (2008)-WB
  • Poverty Line PP KHR 2,351, Urban KHR 1,952 and
    Rural KHR 1,753 (CSES 2004)
  • 25.8 (predicted) of the population living below
    the national poverty line in 2010 compared to 35
    in 2004 (MoP, 2009).
  • Cambodia has a multi-party democracy under a
    constitutional monarchy with national elections
    scheduled for 2013 (Every five years). The
    political situation is stable with the ruling
    Cambodian Peoples Party continuing to be in
    control (royalist FUNOINPEC party as a minority
    coalition partner).

5
Cambodia MFI Evolution
6
Cambodian MFI Performance
  • There were 34 MFIs (7 MDIs) as of December 2012.
  • Operating in 24 provinces with 1,104 offices,
    staff increase to 12,432
  • Credit portfolio increase to 881 million.
  • Credit client increase to 1,297,645 borrowers
    (approx. 40 of household family)
  • Portfolio at risk 30 days was 0.27.
  • Deposit balance increase 144 to 274 million
    collected from 717,884 depositors

7
About PRASAC
8
ABOUT PRASAC
Vision To improve the living standards of the
rural people contributing to sustainable economic
development by being a financially viable
microfinance institution.
Mission To provide sustainable access to
financial services for rural communities and
micro-enterprises
9
Background
  • Started in 1995 funded by EU.
  • PRASAC Credit Association in 2002.
  • MFI licensed as PRASAC Microfinance Institution
    in 2004 with tow main shareholders CRDF and
    PSCo.,.
  • PRASAC received a permanent license from NBC in
    December 2007 (Replacing CRDF with new five
    shareholders, BIO, DCG, FMO, and LOLC)
  • Microfinance Deposit Taking Institution license
    from National Bank of Cambodia in 2010.
  • Registered capital 20MUSD divided among the five
    shareholders (BIO, DCG, FMO, LOLC and PSCo.,)

10
Clientele and Target Client
  • Village households Village households that
    constitute up to 90 or more of all households
    located in rural areas. The majority of the
    clients is involved in rice production and
    farming and has diversified income generating
    activities such as trading or service activities.
    The cash income determines the debt capacity of a
    household for taking out a loan.
  • Micro entrepreneurs The large majority of them
    are family business where family members help out
    in the running of the business. They are mainly
    located in market centers that are located in or
    nearby district or provincial centers, and in the
    rural villages as well. They have few employees
    (lt 5) and normally all of them are family
    members.
  • Small entrepreneurs They are mainly located in
    market centers that are located in or nearby
    district or provincial centers, and in the rural
    villages as well. They have few employees (5-10).

11
PRASACS PRODUCTS AND SERVICES
  • Credit Products
  • Agricultural Loan
  • Trade Loan
  • Service Loan
  • Transportation Loan
  • Construction Loan
  • Consumption Loan
  • Motor Loan
  • Biogas plant Construction Loan
  • Staff Loan
  • Invoice Discounting
  • 2. Deposit Products
  • Savings
  • Term Deposit
  • 3. ATM
  • 4. Local Fund Transfer
  • Foreign Exchange
  • Payroll Service
  • Micro Insurance Products
  • Health Accident

12
Performance highlight
  • Distribution channel Office 167, Online
    office 106, ATM 26
  • Coverage Province 24, District 186, Commune
    1,499, Village 10,874
  • Human resource Total staff 2,135 (42 growth)
  • Loan portfolio
  • Loan portfolio USD 214,857,594 (40 growth)
  • Active borrowers 134,146 (7)
  • Portfolio At-Risk (PAR30) 0.20
  • Deposit
  • Deposit amount USD 57 million (858 growth)
  • Deposit account 133,443

13
Performance highlight (contd)
  • Total assets USD 251,683,934
  • Debt financing/Borrowing
  • Borrowing amount USD 139,382,048 (55 of Total
    Assets)
  • Number of lenders 35
  • Finance performance
  • Profitability
  • Return on Assets 5.64
  • Return on Equity 39.3
  • Efficiency
  • Operating cost ratio 8.9 (8 with assets)
  • Financial cost ratio 5.7
  • Cost-to-income 51.37

14
Performance highlight- Non-financial
  • Establish Social Performance Management Committee
  • Review on Agri-Microfinance Product
  • Financial Literacy Module Development and
    Roll-out
  • Select poverty tool eg. PPI
  • Integrate SPM indicators into MIS
  • Design and differentiate financial products for
    specific target clients
  • Data generation from MIS (Automate report)
  • Market Demand Survey
  • SP criteria for office setting up
  • Incorporate SP goals into bank transformation
    road map.

15
Challenges
  • Tough Competition in credits, savings and
    operations
  • MFIs/MDIs status is still limit to introduce new
    products into the market
  • Most of fund from abroad affected by crisis in
    Europe.
  • No systematic land tenures for all households.
  • MIS system is outsourcing supports.

16
Opportunities
  • Legal frameworks are significantly improving to
    help governing good business framework,
    particularly form National Bank of Cambodia.
  • Strong support from local authorities and
    clients.
  • Good credit discipline clients and more
    confidence in banking system from the public
  • Economic Recovery -More financial service demand
    for business transactions.
  • Credit bureau was already functioned well.

17
Success Factors
  • Stable political and macro environment
  • Enabling legal framework, supportive regulators,
    and support from authorities
  • Supported by clients that have good credit
    discipline and trust
  • Good governance structure, strong internal
    control system,
  • Stronger leadership and professional fellowship
    and high committed staff
  • Competitive, flexible product and good customer
    service
  • Tailor made products and services for clients and
    SMEs in particular.
  • Good MIS system for tracking reports and
    performance.
  • Client Protection Principles Implementations.
  • Social Performance Management is mainly focused
    to ensure the double bottom lines (social and
    finance returns) of the business.

18
Strategic Priorities for 2013
  1. Preparing for commercial bank transformation
  2. Diversifying funding sources by increasing
    savings and deposit collections
  3. Strengthening and improving customer service (by
    creating excellent customer service culture)
  4. Maintaining strong loan portfolio growth (by
    increasing SME segment)
  5. Strengthening risk management (by implementing
    risk register and frequently review it)
  6. Continuing strengthening branding
  7. Social Performance Management

19
Conclusion and development plan
20
Cambodia MFI Challenges
  • The Royal Government of Cambodia has recognized
    the important of microfinance plays in
    socioeconomic development, particularly in the
    areas of the poverty reduction. The main
    constraints, challenges and gaps for development
    of the microfinance sector include
  • strengthening the regulatory and supervisory
    framework and capacity,
  • expanding services,
  • improving outreach,
  • increasing consumer protection,
  • enhancing operational efficiency and the quality
    of service provider, and
  • strengthening sector support.

21
Cambodia MFI Sector development
  • To close gaps, constraints and challenges and
    also fully support to microfinance sector, the
    Royal Government of Cambodia has developed
    strategic plan as follows
  • MFI supervision
  • Common reporting standards
  • Regulatory improvement to support product
    diversification
  • Access to credit information
  • Market transparency and disclosures
  • Cost efficiency
  • Enhancing of microfinance institution management
    information system
  • Support for and enhancing of the role of CMA
  • Promotion of savings mobilization
  • Study and development of capacity for competition
  • Expansion of access to credit
  • Provision of client training

22
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