The CGCC seeks to improve financial inclusion among SMEs. Heng Chivoan
Credit Guarantee Corporation of Cambodia Plc (CGCC) reportedly issued a total of 1,155 Letters of Guarantee (LG) for loans worth $104.9 million equivalent as of February 28 – up 13 per cent year-to-date – as part of its mission to improve financial inclusion among small- and medium-sized enterprises (SME) and promote the sustainability and expansion of businesses worst hit by Covid-19.
As of January 31, the outstanding guaranteed amount was $58.9 million out of the $81.6 million worth of loans covered by the LGs, as noted by the state-owned enterprise in a new report, remaining in the 70-80 per cent target range at just over 72 per cent.
The CGCC was established by Sub-Decree No 140/ANKR/BK on September 1, 2020, and its $200 million Business Recovery Guarantee Scheme (BRGS) was launched on March 29, 2021 in a bid to widen access to formal loans from participating financial institutions (PFI) for working capital, investment and business expansions.
Cambodia Microfinance Association (CMA) chairman Sok Voeun lauded the CGCC’s credit guarantee arrangements as important tools for SMEs to access formal unsecured loans to keep their businesses afloat and expand in light of Covid-19 bruises.
He told The Post on March 13 that commercial banks accounted for 80 per cent of loans covered by the 1,155 LGs, while microfinance institutions (MFI) “partnering with the PFI” constituted the rest.
On the other hand, banking institutions accounted for about 95 per cent of the $104.9 million loan value, he said.
“We’ve provided credit to most of the priority sectors, including services, agriculture and manufacturing,” he affirmed.
“We are happy to join the CGCC because risks are guaranteed. We’ve noted that since the beginning of the project, the rate of bad loans has been minimal because the businesses have the potential to stimulate economic activity, although they may not have collateral.
“Hence the credit guarantee scheme has been a big help for them to expand their businesses,” he said.
The finance ministry has authorised the extension of the BRGS beyond December 31, 2022, until all funds have been utilised, an early-January CGCC statement confirmed, which noted that the terms of the scheme had also been updated, including the maximum guarantee amounts for differing categories of businesses.
The statement disclosed that loans, mostly unsecured, totalling about $89 million were guaranteed by the CGCC as of December 31 under the BRGS.
Cambodia Post Bank Plc, one of the PFIs, accounted for roughly $1 million of that, all of which went to SMEs, confirmed its CEO Toch Chaochek, telling The Post on March 13 that the plan is to increase that to $5-10 million in 2023.
To this end, the bank aims to shift its focus, from large SMEs with adequate collateral that are seeking to expand, to smaller ones without the assets needed for the secured loans to do the same, he revealed.
“The CGCC project is great for SMEs that do not have the collateral to obtain the loans – they have a shot at rehabilitating and expanding their businesses,” Chaochek said.
