Transcript Library Project Update

CAMBODIA RURAL FINANCE
PRASAC overview
Feb 2013, Thailand
CONTENT
1. About Cambodia.
2. Cambodia MFIs Evolution and
Performance.
3. PRASAC Overview.
4. Conclusion and Development Plan.
ABOUT CAMBODIA
ABOUT CAMBODIA
Good strategic location.
 Area:181,035 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
People’s Party continuing to be in control (royalist FUNOINPEC
party as a minority coalition partner).
CAMBODIA MFI EVOLUTION
1995-1999:
Institutionalization
- Transformation of NGO
microfinance activities
- Financial sustainability is
the primary objective
1990-1995: Start up phase
Multilateral and bilateral
donors and NGOs started
financing project.
1999-Present: Commercialization
- Regulations issued by NBC
Licensing to MFI
- Integrated MFI into formal
financial system in Cambodia
- MDI licensing to MFI
-Privatize Cambodia Credit Bureau
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
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ABOUT PRASAC
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 microenterprises
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.,)
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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 (< 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).
PRASAC’S PRODUCTS AND SERVICES
1. 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
5. Foreign Exchange
6. Payroll Service
7. Micro Insurance Products:
 Health & Accident
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
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PERFORMANCE HIGHLIGHT
(CONT’D)
 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%
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PERFORMANCE HIGHLIGHTNON-FINANCIAL
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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.
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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.
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.
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.
CONCLUSION AND
DEVELOPMENT PLAN
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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:
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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
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