Phnom Penh, 7 June 2006 — In a ceremony held in Phnom Penh today, Cambodian microfinance institutions (MFIs) were honored for meeting very high standards in financial transparency. In a worldwide competition for transparency awards that drew 175 entries, three out five top awards went to Cambodian MFIs. These were ACLEDA Bank, AMK and PRASAC. Four more Cambodian MFI’s, AMRET, Vision Fund Cambodia, CREDIT and TPC earned certificates of merit.
The competition was staged by the Consultative Group to Assist the Poor – CGAP – a resource center for the microfinance industry worldwide that is housed at the World Bank. Today’s awards presentation also included the local launch of a new CGAP book on MFIs, and the signing of an agreement pledging technical assistance to the Cambodian Microfinance Association.
In order to win transparency awards or earn certificates of merit, MFIs had to achieve very high standards in providing financial information that is both reliable and comparable. Ten top finance professionals from across the world carefully reviewed all 175 applications to judge how well they complied with international standards on financial disclosure.
On presenting the awards on behalf of CGAP, Adam Sack, General Manager of the International Finance Corporation’s Mekong Private Sector Development Facility (IFC-MPDF) stated: “It is truly remarkable that Cambodian MFIs are leading the way on global standards of transparency, and they should be extremely proud of their achievement.
”Transparency is needed by all stakeholders. Government regulators need reliable financial information to ensure that MFIs are managed properly, and minimize risks to depositors. Investors need this information to decide whether or not to invest in an MFI, and then to monitor their investment. Transparency is important too for MFI clients. Clients need to understand exactly how much money they must repay. This means disclosing not only interest rates but all other costs associated with the loan.”
Ensuring that MFIs are well-managed is crucial stated Adam Sack. “They are often the only source of financial services for poorer people other than money lenders. Greater transparency leads to better managed MFIs and can stimulate competition between MFIs. Ultimately, this results in better quality and sustainable financial services at better prices. It also helps to extend services to people who previously had none.”
In her speech at the awards event, Her Excellency, Neav Chantana, Deputy Governor of the National Bank of Cambodia praised Cambodia’s MFIs for their rapid growth and high standards. “They have come a long way since donors and international NGOs first set them up in the years after the 1992 Paris Peace Accord. By the mid-1990s, a number of microfinance projects were doing well enough to become NGOs in their own right. By the late 1990s, they were starting to transform into commercial enterprises that could operate without donor funding.
“The challenge today,” said Neav Chantana, “is to integrate MFIs further into the financial system and at the same time to bring in new customers who currently have no access to financial services. Microfinance institutions can play a very important role in making it possible for everyone to gain access to financial services. These include loans for micro and small enterprises and the opportunity to save and transfer money safely.”
A second part of today’s event was the signing of a Framework Memorandum between IFC-MPDF and the Cambodian Microfinance Association (CMA). CMA’s services include: advocacy to improve the environment in which MFIs operate; information exchange among MFIs and between MFIs, the government, investors and other interested parties; and dissemination of best practices and capacity building for CMA members.
On signing the agreement, Bun Mony General Manager of the MFI, Cambodia Entrepreneur Building, and president of the CMA, thanked IFC-MPDF for its years of support to MFIs. “This has included technical assistance, training and help in attracting financing from international investors, including the International Finance Corporation. We are very pleased that IFC-MPDF, the Asian Development Bank, and the United Nations Development Program have all pledged to help the microfinance sector in various ways, and L’Agence Française de Devéloppement is considering assistance as well. Support from our members is also crucial in making CMA a success.”
The third part of today’s event was the local launch of a new book on microfinance published by CGAP, Access for All: Building Inclusive Financial Systems. The book describes the current state of microfinance worldwide, as well as the opportunities and challenges ahead. It examines all levels of the financial system and answers key questions about how to expand the frontiers to ensure that poor and low-income people everywhere can access the financial services they need.
The author, Brigit Helms, who will start working for IFC as a regional sector leader in access to finance in August, gave a presentation today on her new book. “This book, which is based on experiences in Asia, Africa and Latin America, shows what works, what does not, and where more learning is needed. It also demonstrates that when international and domestic microfinance providers, governments and financiers commit themselves to the vision of inclusive financial services, the results are impressive. Just look what these stakeholders have achieved here in Cambodia over a very short span of time.”
Helms’ book also addresses the hotly-debated topics in microfinance today, including achieving scale, reaching poorer and more remote clients, as well as reducing costs, which through competition will lead to lower interest rates. “Only about one sixth of the world’s population have access to basic financial services. Access for All shows how to reach the majority of the world’s population – the poor.”
The Consultative Group to Assist the Poor (CGAP – www.cgap.org) is a resource center for the entire microfinance industry, housed at the World Bank, setting standards, offering technical and advisory services, training, and information on best practices, in addition to providing funding for innovative projects. Its 33 members – including bilateral, multilateral and private donors such as the International Finance Corporation – are committed to building more inclusive financial systems that work for the poor. At the Sea Island Summit in 2004, the G8 called on CGAP to lead a global initiative on microfinance and endorsed CGAP’s Key Principles of Microfinance.
For more information contact:
Ann Bishop, IFC-MPDF:
abishop1@ifc.org, 855-012-931-244
Sok Meng, IFC-MPDF:
msok@ifc.org, 855-012-812-841
