Phnom Penh, Cambodia, 22 July 2003 — A high credit rating will allow Cambodian Entrepreneur Building (CEB), a micro-finance institution (MFI) with branches in Phnom Penh, Kandal, Siem Reap and Kampong Thom to attract more funding to lend to its target group – poor women running micro enterprises. The results of the independent rating, which was part of a technical assistance program arranged by the Mekong Private Sector Development Facility (MPDF), was announced today by Adam Sack, MPDF’s Regional Manager for Cambodia and Lao PDR.
According to Mr. Sack, the results are excellent for any lender, but especially for one lending to the poor. “Only one other MFI in Cambodia has received as high a rating, and that one has benefited from foreign experts running the operations for many years. CEB is entirely managed by Cambodian staff, who began micro lending as a non-governmental organization (NGO). With this high rating, banks are now expected to lend CEB the funds they need to expand operations. MFIs like CEB play a crucial role not only by lending money for longer terms than private lenders, but also by providing loans at more reasonable interest rates.”
The evaluation of CEB was undertaken by Micro-credit Rating International, the leading credit rating agency for MFIs. The two-week process involved an intensive review of CEB’s operations, its profitability and its repayment rate (which at 97% is considered very good). Over the last eight months, with co-financing from German Development Cooperation (GTZ), MPDF has helped CEB develop a strategic plan to expand its operations, and in April to gain an MFI license from the National Bank of Cambodia.
CEB staff began working in micro finance in 1996 under Cambodia Community Building (CCB), an NGO providing health education, micro credit and savings for poor women. When donor funding for health education declined after civil disturbances in 1997, CCB focused only on micro credit. In February 2003, in order to meet government regulations, CCB established Cambodian Entrepreneur Building as a private MFI.
Under its new name, CEB’s staff of 100 continue lending only to poor women running micro businesses. “Women borrowers have a very good record in repaying loans,” said Mr. Bun Mony, CEB’s General Manager, “and poor women prefer to set up micro enterprises because these are often the only opportunity for them. We also support women because they provide important income for their families, they are usually responsible for family welfare, and manage family resources, including savings. By lending to women, we can help the family as a whole.”
About half of CEB’s borrowers are small traders who borrow to buy the stock they sell. Another 20% borrow to buy equipment for small service businesses such as tailoring, dressmaking, or operating a food stall. The third largest group (10%) are farmers who borrow to buy seed, purchase livestock or culture fish. CEB also lends to small groups (usually neighbours or friends in the same community) who lack collateral, but can borrow as a group by guaranteeing repayment if any member defaults.
The amounts borrowed by individuals and groups average around $135, but can be as high as $5,000 or as low as $25. Repayment terms are as short as three months, but average one year. Since 1996, CEB and its NGO predecessor CCB, have made more than 196,500 loans to more than 70,000 clients.
