Today Miguel from ADA, our investment partner arrived, and we headed to see the Cambodian Microfinance Association. This gave us a good chance to learn more about the Cambodian microfinance market and the country’s economy.
The industry was launched in Cambodia in the early 90s when the country began to open up after years of economic isolation. Many NGOs and UN organisations moved into the country at this time and provided support for microfinance initiatives. Over time the institutions providing microfinance have evolved and they are no longer dependent on donations from NGOs and UN organisations. Many organisations are very well established and LMDF already works with 3 microfinance institutions in the country: IPR, SAMIC and Chamroeun.
Demand for microfinance has been very high as there is an extremely large unbanked population. Just over one fifth of the country has a bank account. In recent years, growth in microfinance has ballooned. Many microfinance institutions experienced growth rates of 40+% last year. This has led to concerns about the sustainability of the market as it currently stands. As well as visiting MFI partners, we are interested in learning more about this issue while we are visiting Cambodia.