Microfinance Sector Expands Agricultural Credit Products to Further Boost Farming

Phnom Penh: The microfinance sector considers agriculture a priority sector and has developed more agricultural credit products and services to meet the needs of farmers and local agricultural communities.

Kaing Tong Ngy, spokesperson for the Cambodia Microfinance Association (CMA), said that, historically, the microfinance sector also emerged from agriculture. The association will therefore continue to support lending to people and businesses connected to the agricultural sector, as microfinance institutions consider agriculture a priority.

He said that a range of products and services are currently available to meet the practical needs of people in the agricultural sector, including seasonal agricultural loans and loans tailored to farmers’ requirements. For example, agricultural loans generally do not require borrowers to make monthly principal repayments. Instead, they may repay the principal once or twice a year, when they have harvested their crops.

Kaing Tong Ngy said: “In addition to the credit products available in the market, some institutions are developing new products to meet customer needs. For example, recently we have been promoting loans for agricultural communities, which can help strengthen the economies of local communities, particularly by providing loans to communities without requiring collateral when they meet the eligibility conditions for credit.”

He added: “To reduce risks, we are currently working with insurance companies and some development partners to pilot crop insurance products. If crops are affected, the insurance will help provide protection against and mitigate the risk.”

The spokesperson said that informal lending remains a challenge for the agricultural sector because of its excessively high interest rates and lack of legal protection. The association is therefore encouraging its members to study farmers’ practical needs and develop loan products suited to those needs.

Khea Borann, Chief Executive Officer of microfinance institution AMK, also said that AMK continues to prioritize agriculture and has provided the vast majority of its loans to farmers for agricultural activities. In addition, the institution focuses on the small and medium-sized enterprise sector to contribute to economic development.