Credit Access in Cambodia
In recent years, cooperation between financial institutions and the Credit Bureau of Cambodia (CBC) has made credit access in Cambodia easier. Currently, 49.9 percent of individuals in Cambodia have access to credit. Credit coverage in Cambodia covers 5,059,897 individuals, and in 2017, the country came in seventh in the World Bank’s “Ease of Doing Business” ranking under “Getting Credit,” a category which measures credit information sharing and legal rights of borrowers and lenders.

“We are very proud our activities have allowed Cambodia to improve its position in the World Bank’s ranking, particularly when it comes to securing credit,” stated Oeur Sothearoath, the CBC’s CEO. The CBC is Cambodia’s leading provider of credit information, analytical solutions and credit reporting services to banks, microfinance institutes, leasing companies, credit operators and consumers in Cambodia. It provides the tools needed to analyze and reduce credit risks and, even more so, increase transparency in providing credit.

The deputy governor of the National Bank of Cambodia (NBC), Neav Chanthana, has also agreed that the work of the CBC has allowed borrowers more extensive and faster access to credit, noting that the new World Bank rating has already been able to attract new investors into the country. She further applauded the CBC, stating how its achievements reflect the development of the country’s financial infrastructure, with improvements to the credit information system being vital for customers and the financial sector.

The NBC, along with the Association of Banks in Cambodia, the Cambodian Micro-finance Association and the International Finance Corporation, all have been strong supporters of the establishment of the CBC. The CBC, in response to the demands of the National Bank, plans to run a fair, transparent and well-managed credit market which would support economic growth in Cambodia.

Credit access in Cambodia has continued to improve since programs launched in 2010, making credit for agribusinesses more accessible. Cambodia’s agribusiness sector plays an essential role in aiding the country’s economic growth, poverty reduction and job creation. This financial program has been a collaborative effort between the Royal Government of Cambodia, the International Finance Corporation and the International Development Association.

By guaranteeing that 50 percent of the loans extended by participating banks and microfinance institutions extend to this sector, the program aims to mitigate the default risk banks face when lending to Cambodian agribusinesses. This improved access to finance for agribusinesses has provided strong support to the country’s economy, with agriculture accounting for one-third of the country’s GDP and employing around 70 percent of the population.

Further data is provided by the World Bank with its Credit Information Index which measures the scope, access and quality of credit information available through public registries and private bureaus. The index includes a variety of indicators whose values indicate the amount of credit information available.

The “strength of legal rights index,” on a scale from zero to 12, measures the degree to which collateral and bankruptcy laws protect borrower and lender rights, and “credit bureau coverage” indicates the number of individuals and firms listed by a private credit bureau with information on their borrowing history. The country scored 10 and 49.9 percent.

Credit access in Cambodia over the past few years has increased in strength and size. With continued improvements being made in credit access, positive changes should continue to be seen in Cambodia’s businesses.

– Ashley Quigley

Photo: Flickr