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Banks, MFIs Urged to Support SMEs

Chea Vannak / Khmer Times Share:

PHNOM PENH – Banks and financial institutions are urged to provide more support to small and medium enterprises (SMEs), especially those owned by women, as access to capital remains a major obstacle for their growth.
 
Minister of Economy and Finance Aun Pormoniroth made the call earlier this week, according to state-run news agency AKP.
 
“The government recognizes the potential of SMEs to drive economic growth and increase the income of people, but the sector, however, still faces problems to access capital for operating and expanding their businesses. This hampers the growth of SMEs,” the minister was quoted as saying.
 
Mr. Pormoniroth underlined that the main barrier SMEs faced in accessing capital was the lack of collateral, which was an important requirement for banks and financial institutions to guarantee their loans.
 
On Monday, Acleda Bank received an investment of $160 million through a syndicated loan from the International Finance Cooperation (IFC), Goldman Sachs 10,000 Women and three investment banks to help provide finance for women-owned SMEs. The intervention was necessary because according to the IFC 40 percent of SMEs are owned or managed by women, yet the vast majority of them are either unserved or underserved.
 
Hout Ieng Tong, the CEO of Hattha Kaksekar Limited, said the minister’s comments follow statements made by micro-finance institutes (MFIs) that they are prioritizing SMEs in their lending policies.
 
 “MFIs like Hattha Kaksekar have developed services for SMEs with a longer repayment period for small loans,” said Mr. Ieng Tong.
 
Keo Mom, president of the Cambodia Women Entrepreneurs Association (CWEA), said inflexible timelines for making repayment installments for loans and insufficient collateral were the main factors preventing SMEs from seeking funding from banks.
 
“Entrepreneurs are limited in their ability to get loans from banks because they just do not have enough assets to be put up as collaterals to guarantee their borrowings,” said Mrs. Mom. “SMEs want banks and financial institutions to provide loans with a longer period of repayment.”
 
Seeking financial services is still hard for SMEs, especially for women-owned SMEs in Cambodia, although special offers have been made by banks to get us as its customers,” said Mrs. Mom.
 
“With these special services offered, woman-owned SMEs can now get limited financial assistance from banks,” she said. “The interest rate [for loans] is quite a bit lower than normal.”
 
However, Mr. Ieng Tong, Hattha Kaksekar Limited’s CEO, said the lending to SMEs depended on the capital source.
 
“We borrow capital from another source with a short repayment period and have to give it as loans to those who apply for it with the same repayment period. If we lend it to the SMEs with a longer repayment period, there will be a mismatch in the liquidity. Due to that we just cannot do it,” he pointed out.

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