Mothers Financial Japan Plc became the latest entrant to Cambodia’s crowded microfinance market when it launched operations on Friday, yet the new microlender sees no shortage of opportunity given the country’s rapidly expanding consumer economy.
The Japanese-owned microfinance institution (MFI), which received its operating licence from the National Bank of Cambodia in February, will provide loans of $500 to $1 million to cover purchases of cars, motorcycles, furniture, consumer electronics and housing.
It hopes to carve out a niche in the market by offering competitive introductory monthly interest rates of 1 to 1.8 per cent with terms from 1 month to – in the case of home loans – 25 years.
“Mothers Financial Japan has a competitive edge in that it offers lower interest rates and longer-term loans than other [microlenders],” said Po Orors, the MFI’s chief operating officer.
Orors said the MFI would establish a foothold in the capital before tackling the provinces, initially aiming to set up 80 per cent of its branches in Phnom Penh.
The company has already invested sufficient capital to meet the central bank’s recently revised minimum capital requirement of $1.5 million for MFIs, he added.
“Our investment size meets the requirement of the National Bank of Cambodia, and with the addition of funds reserved for lending to our customers, we have sufficient liquidity to provide credit,” Orors said.
Hout Leng Tong, president of the Cambodia Microfinance Association (CMA), said Mothers Financial was the industry body’s fourth new member since the start of the year – yet the market still had room to grow.
He said while approximately 45 per cent of the country’s 3.4 million families have access to finance, another 20-30 per cent are still in need.
“There is still room in the market for new investors, and I believe more will join the market this year,” he said.
The CMA’s member pool – comprising 41 MFIs, seven NGOs and Acleda Bank – issued a total of $2.9 billion loans in 2015, a 45 per cent year-on-year increase, according to Tong.
The average loan size was $1,460.
Tong said he expects 2016 to be another record year.
“Based on the volume of loans in the first quarter of the year, I believe the lending growth rate will soar this year,” he said.