Stockholm (NordSIP) – Swedish development financier Swedfund is making a loan of $15 million to Prasac Microfinance, Cambodia’a largest microfinance company, for on-lending to the country’s micro-businesses and SMEs, which account for the majority of jobs in Cambodia.
The Cambodian microfinance sector has roots in the early 1990’s when microfinance was an important component of rebuilding the country’s financial system alongside the contribution of international aid following its peace agreement with Vietnam in 1991. Despite Cambodia’s recent stable economic growth, 20% of its 16 million inhabitants live on less than $1.5 per day.
Because the majority of jobs are created by micro- or SMEs, more actors need to enter the regulated market in order to provide entrepreneurs the opportunity to receive funding from official institutions.
Swedfund, whose purpose is to provide funding, expertise and support for investment in emerging markets, syndicates its loans together with Norwegian and German development financiers Norfund and DEG. The purpose of the loan is to try to spur the development of Prasac into a commercially licensed bank, thereby contributing to developing Cambodia’s financial system.
“Investing in Prasac, a responsible microfinance institution focused on female borrowers, allows us to contribute to financial inclusion, an increased tax base and job creation in Cambodia, which is crucial for reducing poverty,” Swedfund CEO Gerth Svensson said in a press release.
Prasac has 180 branches across Cambodia and focuses its activities on rural areas in order to increase financial inclusion and contribute to sustainable economic development. The company is SMART certified, meaning it has installed systems that protect customers through responsible and transparent pricing, the prevention of overcrowding and respectful treatment.
Image © Yuriy Zhuravov Shutterstock
