The FINANCIAL — IFC, a member of the World Bank Group, has disbursed a loan of up to $10 million to Hattha Kaksekar Ltd., Cambodia’s fourth-largest microfinance institution, to support the growth of micro, small, and medium businesses in the rural and agricultural sectors and help develop digital finance solutions for these enterprises. IFC’s financing is expected to help HKL more than double its micro and SME loan portfolio to $504 million from $229 million by the end of 2017.
A third of small and medium businesses in Cambodia are agribusinesses, which make up half of all SME financing needs in the country. Limited access to finance is one of the biggest constraints hindering these businesses from expanding further and becoming more competitive, according to IFC.
IFC’s funding will help HKL address this problem by extending more loans and providing financial services to low-income borrowers and agribusinesses in rural areas, with the number of its outstanding loans expected to grow to 154,000 from 100,000 within two years. Extending these financial services through electronic and digital channels will also help IFC and HKL meet their objectives of lowering costs and improving reach.
HKL is committed to developing an outstanding mobile banking service that will target poor and rural customers who cannot currently access the company’s financial products and services.
“By using mobile products, customers will be able to do many financial transactions anywhere and at any time, such as mobile top-ups, bill payments, loan repayments, money transfers, and other financial services,” said Hout Ieng Tong, President and CEO of HKL. “The disbursement of IFC’s loan today will contribute to Cambodia’s macro-economic growth because it will be used to directly support HKL’s micro and small business customers who work very hard to improve their lives and education.”
This is IFC’s fourth loan to a Cambodian microfinance institution this year. By investing in and mobilizing funding for microfinance institutions, IFC aims to expand microfinance lending to more than the current 845,000 borrowers, or about 48 percent of all MFI borrowers in Cambodia.
“IFC is helping HKL to promote new and innovative products such as mobile banking to elevate its business to the next level,” said Adel Meer, IFC Financial Institutions Group Manager for East Asia and the Pacific. “By providing long-term funding to leading microfinance institutions in Cambodia, we can help them scale up their operations and increase lending to the micro, small, and medium businesses that are critical for the country’s economic growth.”
Over the last two decades, IFC has invested more than $4 billion in around 450 microfinance projects for 250 clients in nearly 100 countries with the aim of ending poverty and promoting financial inclusion.