Post-Covid recovery sees women-led businesses on the uptick

In 2020, entrepreneur Bopha Pen found herself at a crossroads, when Covid hit her business. She’d started Rithypul in 2012 to increase financial awareness in the country.

But by 2020, her business did not have sufficient working capital for day-to-day operations. When she sought a bank loan, the property collateral proved insufficient, till the Credit Guarantee Corporation of Cambodia (CGCC) stepped in. CGCC guaranteed her loan with one of its partner financial institutions CAMMA Microfinance and the startup Rithypul managed to tide over Covid.

Bopha, now continues to run Rithypul and has launched training centres and a fintech mobile app – Kotluy.

She told CGCC in its monthly newsletter that the fresh capital helped her “meet marketing, advertising, and overall business operation costs. We have expanded our business with more staff and customers.”

Another unique, woman-led business that has benefitted from CGCC’s loan guarantee is Thida Kheav’s SOGE. SOGE, which expanded to Solar Green Energy (Cambodia) Co., is a renewable energy semiconductor manufacturer. Since manufacturing requires upfront heavy capital outlay, CGCC stepping in has proved effective for this business too.

And women like Bopha Pen and Thida Keav are one of hundreds of such women beneficiaries. CGCC has guaranteed business loans to as many as 811 women entrepreneurs as of December 31, 2023; which forms about 42 percent of its overall loan portfolio.

And this has been a steady growth. CGCC which launched its first loan guarantee scheme in 2021 – had 23 percent of its total borrowers being women in 2021. This number increased to 35 percent of total borrowers in 2022; and by 2023 women business were as much as 42 percent of CGCC’s total loan portfolio.

At CGCC’s annual seminar on Wednesday, titled “Diversifying credit guarantee mechanism for sustainable financing of MSMEs,” H.E. Ros Seilava, Secretary of State of Ministry of Economy and Finance, high representative of H.E.Deputy Prime Minister, Minister of Economy and Finance of Cambodia, told the Khmer Times that “CGCC is proud of the gender diversity in its portfolio. We feel 42 percent of loans being given to women is a substantial number. We will continue supporting women-led businesses.”

CGCC currently has five loan guarantee schemes, namely the Business Recovery Guarantee Scheme (BRGS), the Co-Financing Guarantee Scheme (CFGS), the Co-Financing Guarantee Scheme for Tourism (CFGS-TR), Portfolio Guarantee Scheme (PGS) and the Women Entrepreneurs Guarantee Scheme (WEGS).

To close the gender gap, CGCC has designed WEGS such that banks and microfinance institutions are incentivised to lend more to women. Under WEGS, CEGS gives a higher guaranteed coverage (higher percentage of the loan being guaranteed) and lower fees (since a few percentage points make a huge difference when it comes to taking bank loans).

Anyone familiar with bank loans is probably aware that documentation is the most arduous part of the loan application. To reduce the documentation work involved, CGCC has launched a portfolio guarantee scheme (PGS). Under the PGS, banks and MFIs can bundle together loans that are similar and get the guarantee approval on the bundle – rather than for each loan. For what loans can be bundled together like this – CGCC has drawn up with its partner financial institutions a mutual agreement. Being pre-agreed, banks and MFIs can now enroll multiple loans in PGS to get faster-guaranteed approval.

Credit to: Khmer Times, Published on 06 February 2024