Tag: COVID-19

Various credit guarantee schemes have played a crucial role in strengthening entrepreneurship and enhancing financial inclusion in Cambodia, especially during the Covid-19 crisis, through smooth disbursal of loans, said top officials who gathered yesterday for a conference on ‘Credit Guarantee Schemes’ Potential to Strengthen SME’s Financial Inclusion in Cambodia.’

Wong Keet Loong, CEO of the Credit Guarantee Corporation of Cambodia (CGCC) said it was incorporated on November 3, 2020, with two main policy frameworks. First to help viable businesses by providing access to formal financing and second to ensure sustainability for the CGCC’s operations.

The conference, jointly organized by the Ministry of Economy and Finance (MEF) and CGCC, aimed to raise awareness of credit guarantee benefits for SMEs.

Wong said that the CGCC has come up with three guarantee schemes so far — the Business Recovery Guarantee Scheme (BRGS), launched in March 2022, the Co-Financing Guarantee Scheme (CFGS), in September 2021 and the Women Entrepreneurs Guarantee Scheme (WEGS) in April 2022, besides the extension of the CFGS to tourism. “Each scheme was specifically designed to target different market segments,” he said.

He added that CGCC has succeeded to expand its guarantee scheme all over the country, even in the remotest provinces, thanks to the vast branch networks of the participating financial institutions (PFIs). “However, more still needs to be done to ensure that financial inclusion is improved for different groups of businesses across the country,” Loong said.

“We also see a positive trend among female borrowers, who get loans without collateral. There were only 43 women-owned SME who borrowed in 2021, but by the end of July 2022, there are 197 of them. This was due to the PFIs’ women-supported loan products and CGCC’s efforts in reaching out to more women-owned SMEs for uncollateralized loans,” he noted.

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As of now, CGCC has 23 PFIs with more than 1,000 branches across the country, yet only 18 PFIs have applied for credit guarantees so far. “I firmly believe that this conference could raise awareness among all the stakeholders about the benefits and potential of credit guarantee. I am looking forward to seeing more credit guarantee requests by PFIs after this event,” Loong said.

Ros Seilava, Secretary of State of the Ministry of Economy and Finance and Chairman of CGCC, said that the CGCC has so far provided a credit guarantee for $57 million in loans disbursed by PFIs.

Based on data from the World Bank, 41 countries launched 57 credit guarantee schemes during the Covid-19 crisis in 2020 to boost lending from financial institutions to businesses through risk sharing.

Credit to Khmer Times: August 18, 2022

The Credit Guarantee Corporation of Cambodia (CGCC) has supported 448 businesses by providing credit guarantees for their loan applications, amounting to $45.5 million as of May 31, according to the latest data.

The total loan amount included both national and foreign currencies with 19.8 billion riels and 40.56 million dollars. The loan sizes were in the range of $6,000 to $1 million. Letters of guarantee for 343 working capital loans, 103 investment expansions, and two capital expenditures were provided, according to a CGCC release.

The CGCC was established by the government in September 2020 as a state-owned enterprise under the technical and financial guidance of the Ministry of Economy​ and Finance.

The scheme is designed to help businesses that have good potential to receive bank loans even if they don’t have any collateral. It provided a merit-based opportunity for Small and Medium Enterprises (SMEs) and Micro and Small Medium Enterprises (MSMEs).

CGCC’s CEO Wong Keet Loong told Khmer Times that a credit guarantee is a financial instrument that supports both financial institutions and small enterprises.

For SMEs and MSMEs, it improves financial inclusion. It enables them to borrow without having the burden of providing collateral whenever their business capacity grows and they have higher loan requirements.

“Small business owners can obtain loans at affordable rates under the scheme. By having access to borrowing, business owners are able to scale up their businesses. We hope to reduce poverty to a certain extent through this,” Loong said.

CGCC launched the $200 million Business Recovery Guarantee Scheme (BRGS) in March 2021 to support businesses including MSMEs as well as large firms by enhancing their access to formal loans from the Participating Financial Institutions (PFIs) for working capital investment and business expansion.

The scheme is available until the end of this year and the guaranteed loans will be disbursed through the PFIs on a first-come-first-served basis.

Article credit to: Khmer Times, 06 June 2022

Click here to read about: CGCC recommends ways to Access to Guaranteed Loans

State-owned Credit Guarantee Corporation of Cambodia Plc (CGCC) has issued credit guarantees totaling $45.5 million to 448 businesses, as of May 31.

Out of the 448 businesses, 431 are small- and medium-sized enterprises (SMEs), and 17 are large, while 138 are owned by women.

CGCC was established by Sub-Decree No 140/ANKR/BK on September 1, 2020, to support businesses, especially SMEs to enable formal loans by guaranteeing lenders that principal and interest payments will be made.

Through its ongoing schemes, CGCC provides credit guarantees on loans disbursed by participating financial institutions (PFI), which include both banks and microfinance institutions (MFI).

In turn, CGCC requests that applicants fully understand PFI’s requirements and make the necessary preparations before taking out loans with credit guarantees.

“Bridging the gap between credit supply and funding demand supports economic growth and CGCC’s missions of providing credit guarantees to businesses and sharing the risk with crediting institutions, and increasing financial inclusiveness,” said CGCC deputy CEO No Lida.

Meanwhile, Hong Vanak, an economic researcher at the Royal Academy of Cambodia, told The Post on June 5 that the provision and receipt of a loan with legal guarantees have played an important role in stabilizing the economy.

The credit guarantee agency also ensured that the process went smoothly, particularly during pandemics.

Vanak said when the financial sector stabilizes, investment and job creation will also increase.

In addition, SMEs with sufficient capital lead to better production processes, resulting in lower imports of goods and increased exports.

“Providing credit guarantees helps lending institutions and lenders [business owners] build confidence in each other,” Vanak said.

He added that prior to guarantees, CGCC requires conditions to be met while it studies the type of business or business. “They [always] ask for clarity first.”

In September, CGCC launched the Co-Financing Guarantee Scheme (CFGS), which is specifically designed for co-financing loans disbursed under the SMEs Co-Financing Scheme Phase II (SCFS II), of Small and Medium Enterprise Bank of Cambodia Plc (SME Bank).

The CFGS is the second credit guarantee scheme offered by the CGCC. The enterprise launched the $200 million Business Recovery Guarantee Scheme (BRGS) in March 2021 in a bid to spur economic recovery during the Covid-19 pandemic.

The CFGS provides a way for CGCC’s PFIs to offer unsecured loans or those that don’t require any form of collateral, to SMEs.

Article credit to Phnom Penh Post, 5 June 2022 

Click here to read about: CGCC recommends ways to Access to Guaranteed Loans