Credit Guarantee Corporation of Cambodia Partners with Cambodia Chamber of Commerce to Hit Aim of $100M in Loans for 2023
May 9, 2023Latest News
Cambodia Investment Review
The Credit Guarantee Corporation of Cambodia (CGCC) and Cambodia Chamber of Commerce (CCC) have entered a strategic partnership to improve access to guaranteed loans for Micro, Small, and Medium Enterprises (MSMEs) in Cambodia.
The partnership was formalized with a Memorandum of Understanding (MoU) signing ceremony. This collaboration aims to provide support to MSMEs, primarily CCC members, enabling them to obtain financing despite collateral challenges and promote financial literacy across the country.
CGCC is a state-owned enterprise that provides credit guarantees on loans disbursed by participating financial institutions, offering support to viable businesses that lack collateral when applying for loans.
On the other hand, CCC, the National Chamber of Commerce, represents the interests of the business community in Cambodia and plays a crucial role in promoting the private sector’s development and supporting MSMEs’ growth. This partnership will allow CCC members to benefit from CGCC’s guarantee services, providing additional security to partnering financial institutions and making it easier for CCC members to access financing.
Improving financial inclusion and financial literacy
H.E. Oknha Nguon Meng Tech, Director General of CCC, emphasized the importance of MSMEs in Cambodia’s economic development and the challenges they face, particularly financial constraints. The partnership between CCC and CGCC aims to promote access to guaranteed loans for MSMEs’ development and deepen the cooperation between the two institutions.
CGCC CEO Wong Keet Loong noted that the MoU with CCC is a significant milestone for CGCC, as it allows the organization to reach CCC members across the country. Together, CGCC and CCC will support the development of SMEs in Cambodia by improving financial inclusion and financial literacy.
The CGCC has been organizing seminars to inform the business community in Cambodia about guaranteed loans, such as the recent seminar held in Svay Rieng Province in collaboration with the Svay Rieng Chamber of Commerce. More than 50 participants attended, including management and staff of participating financial institutions and small and medium business owners in Svay Rieng.
Initially launched as a tool to close the credit gap that emerged between small businesses during the pandemic, the CGCC issued its first guarantee in April 2021, the CGCC has already supported 1,275 businesses by providing credit guarantees for their loan applications, amounting to $113.6 million. Wong Keet Loong has set an ambitious goal for CGCC in 2023: to provide guarantees to 1,500 SMEs and guarantee $100 million in loans.
However, the rise in global interest rates might impact the CGCC’s growth. Loong pointed out that the increasing cost of funding due to rising US interest rates affects financial institutions and their lending capabilities. Despite these challenges, the CGCC remains committed to expanding the reach of its guarantees.
A focus on female-led businesses
The CGCC currently offers four different guarantee products, including the Women Entrepreneurs Guarantee Scheme (WEGS), aimed at supporting women and female-owned businesses.
According to CGCC’s data, 40% of its guarantees go to female-owned businesses, while 65% of Cambodian MSMEs are run by women. By increasing financial literacy and awareness of credit guarantees, the CGCC aims to bridge this gap and promote female entrepreneurs’ growth in Cambodia.
One factor contributing to the gap between female-owned businesses and those receiving guarantees is the lack of registration for many women entrepreneurs. Improving financial literacy can address this issue, resulting in more confident, informed entrepreneurs who can negotiate better loans.
Mr. Loong has previously explained that CGCC supports unregistered businesses for their first year, with the expectation that they will register by their anniversary. If they remain unregistered, an additional 0.5% charge is applied, incentivizing businesses to formalize their registration. This approach aims to increase the number of registered female-owned businesses while still providing initial support.
The partnership between CGCC and CCC is a testament to their shared commitment to promoting economic growth and development in Cambodia. By working together, the two organizations will help SMEs overcome financing challenges and unlock their potential to drive economic growth in the country.