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MFI Growth Still Healthy after 10 Years

Chea Vannak / Khmer Times Share:

The number of microfinance institutions has been growing steadily over the past decade and this has contributed rising living standards in the Kingdom, according to the Cambodian Microfinance Association (CMA). 
Hout Ieng Tong, the newly-elected president of the CMA and the CEO of Hattha Kaksekar Limited, one of the largest MFIs in Cambodia, said the sector has not experienced any big problems despite its rapid growth. 
“I think what people are worried about is the fast growth in this sector,” he said. “Some people said that because of the rapid progress there would be big problems in the future, and others said the fast growth was just a bubble that would eventually burst, but that is not the case,” Mr. Ieng Tong added. “The organization was established in 2006, which was the year of MFI, but we have not seen any negative signals that would affect the progress of MFIs.” 
According to a report by the CMA, about 2 million Cambodians used the financial services of an MFI last year, almost double compared to 2010 when MFIs had about 1 million clients. The CMA said the sector’s growth rate was about 16 percent annually. 
Outstanding loans totaled nearly $3 billion in 2015, up from $425,921 in 2010, an annual growth rate of 42-53 percent, the report said. The portfolio at risk rate was at 0.67 percent in 2015, which the CMA claims is still a healthy figure. 
Former CMA president Bun Mony said last Friday that the increasing number of clients every year is an indication of strong confidence in the MFI sector, especially from people in rural areas. 
Mr. Mony said the financial services provided to people by the MFIs has helped develop and increase economic activity. But Mr. Ieng Tong said that MFI operations could be affected by the country’s macro economy, any instability in politics or world financial crisis. 
“Cambodia has a stable political situation and economic growth is healthy, so most MFI operators don’t think there will be any factors to badly affect the sector,” he said.
The Ministry of Economy and Finance has said it was concerned over the fast progress of the MFI sector, especially in the real estate market. But Mr. Ieng Tong said MFIs are careful when they give loans for real estate. 
The CMA, which now has 62 MFI members, was established in 2006 aiming to facilitate microfinance operators in their operations and to strengthen communications with authorities, national and international donors, creditors and investors. 
The CMA will celebrate its 10th anniversary on March 14-15 at the Koh Pich Conventional Hall.

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