Two industry bodies have teamed up to reinforce cooperation between the agricultural and microfinance sectors, and enhance access to financial literacy education and services for agriculture as a path to improved productivity, production and further development.
A memorandum of understanding (MoU) was virtually signed to this end on October 13 by Cambodia Microfinance Association (CMA) and the Cambodia Agricultural Cooperative Alliance (Caca).
CMA chairman Kea Borann said the partnership would provide the agricultural community with wider and more sustainable access to financial services, to underpin the growth recorded by the sector.
He said the MoU "aims to enhance the financial environment as well as the cooperation between the two institutions through outreach on financial literacy issues for community members, and the research and implementation of joint projects to resolve challenges in both fields and to promote responsible and sustainable access to financial services."
Caca chairman Hang Sokun argued that stakeholders must command a reasonable level of knowledge across a diverse range of suspects, especially financial services, to develop a strong and sustainable agricultural sector in Cambodia and to prop up growth.
"We unquestionably need capacity-building support to develop agricultural communities and unions of cooperatives, and that will require the involvement of a variety of stakeholders, especially from the financial sector," he said.
Rath Sovannorak, director-general of the National Bank of Cambodia's Banking Supervision Department, said outstanding loans granted by the Kingdom’s financial institutions to the agricultural sector reached $4.2 billion, as of August 31.
And agriculture accounted for 19.3 per cent of the microfinance sector’s 27.5-trillion-riel ($6.8 billion) total loan book as of December 31, at 5.3 trillion riel, he said.
While average loan sizes have gradually increased from year to year, the sector remains dogged by a litany of issues involving matters such as financial literacy, collateral and paperwork, he added.
"Agriculture is a potential sector that plays an important role in supporting national economic growth, and has been rapidly evolving from traditional systems to modern models and agro-industry, through diversification to meet domestic demand and exports.
“This shift requires new human resources and techniques – especially against the backdrop of the global Covid-19 epidemic. Access to financial services for agriculture will be a key driver to enhance the productivity of farmers, farming communities and suppliers, to rehabilitate and boost the national economy," Sovannorak said.