IFC Lends $100 Million to Acleda and Amret

Khmer Times/Sok Chan and Chea Vannak
Wednesday, 17 February 2016

The International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, is lending another $100 million this year for loans to small and medium-sized enterprises in Cambodia through Acleda Bank and Amret microfinance institute (MFI), it said.  

The bank and the MFI will receive $50 million each, the IFC said.

Adel Meer, regional industry manager of IFC, said it had injected about $200 million last year to five clients: Acleda Bank, and MFIs Amret, AMK, Prasac and HKL.

Mr. Meer said IFC is committed to supporting the development of the financial sectors of developing countries, with the goals of increasing profitability and expansion of services. The $50 million syndicated loan to Amret will help it increase lending to small businesses, particularly in the agricultural industry, while the $50 million syndicated loan to Acleda Bank is aimed at expanding lending to SMEs, with at least half of it going to SMEs owned by women, the IFC said.

Amret CEO Chea Phalarin said that the funds will increase its ability to support more than 400,000 microentrepreneurs, most of whom work in agriculture. The IFC became a shareholder in Amret, buying 19.9 percent of the MFI in March last year, he added. In addition to providing the loan to Amret, the IFC also provides technical advice in risk management and corporate governance, Mr. Phalarin said. This will help the MFI transform into a commercial bank, he added.

 “With a wide network of branches in all 25 provinces across the country, we will continue our outreach to agricultural enterprises, providing them with reasonable and competitive financial product and services,” Mr. Phalarin said. “Thanks to the IFC, Amret has been able to diversify our sources of funding and connect to international lenders and this financing package will enhance our ability to mobilize additional long-term funding from private investors,” he said.  

The IFC said that more than two-thirds of nearly 10,000 women-owned SMEs in Cambodia face difficulties obtaining loans from financial institutions, leaving a financing gap of about $172 million per year. The $50 million lent to Acleda Bank is to help reduce this gap so that women entrepreneurs can reach their potential, the IFC said in a press release. 

Expanding lending to women-owned SMEs will help Acleda establish itself as the gender finance leader in the Mekong region, Acleda said. The $50 million financing package to Acleda Bank consists of $30 million from IFC and $20 million from the French banking group BRED Banque Populaire, according to a press release from IFC. 

In Channy, president and group managing director of Acleda, said that women-owned business are vital to the  economy but financing remains limited. Acleda aims to increase its lending to women-owned enterprises to more than $1.5 billion by 2019, he said, adding that the loan from the IFC would help it accomplish this. 

He added that the long-term funding will help Acleda strengthen its existing SME-lending business and allow it to expand lending to many more SMEs owned by women over the next four year,” Mr. Channy said. 

Te Taing Por, president of the Federation of Associations for Small and Medium Enterprises of Cambodia, welcomed the new loans and said he hoped they would be channeled to SMEs. “If the funding is focused on supporting SMEs, this would be great because it will allow them to expand,” Mr. Taing Por said. He cautioned, however, that previously announced funding to support SMEs through banks and MFIs had not been as successful as expected. Many loans were given for buying real-estate rather than investing in business expansion, Mr. Taing Por said. 

The IFC said its investments in developing countries have risen to nearly $18 billion.