Cambodia Investment Review

More financial inclusion promised for women entrepreneurs under new agreement between associations

More financial inclusion promised for women entrepreneurs under new agreement between associations

The Association of Banks in Cambodia, the Cambodian Microfinance Association, and the Cambodian Women Entrepreneurs Association signed a Memorandum of Agreement to promote financial inclusion and to raise awareness of access to finance among women entrepreneurs.

The Memorandum of Agreement (MoA) between the three associations was established to support the development plan of the Cambodian government, as well as complimenting the National Strategy for Financial Inclusiveness 2019-2025.

The partnership aims to improve the financial ecosystem, to promote innovative credit products through strengthening and expanding cooperation, training, organizing events, joint workshops to improve financial literacy and financial inclusion among women entrepreneurs and small and medium enterprises in Cambodia.

HE Oknha Keo Mom, President of the Cambodian Women Entrepreneurs Association (CWEA) said some women entrepreneurs still have limited knowledge of maintaining proper and accurate accounting records. These and other issues make it difficult for financial institutions to lend and to meet the needs of women entrepreneurs.

She added, under this cooperation, the two financial associations will help strengthen the capacity of women through in-depth training on specific accounting records, financial statements, accurate income and expenditure records.

According to the CWEA, the MoA would compel the ABC and CMA to facilitate lending for women entrepreneurs, broadening the range of products and services available to them and ensuring reasonable interest rates and convenient terms. The CWEA “also encourages women entrepreneurs to properly and legally register to access credit from financial institutions and to build trust”.

Celia Boyd, Managing Director of the business incubator for women entrepreneurs in Cambodia SHE Investments told Cambodia Investment Review that financial literacy is crucial for women business owners. 

“Not only are most micro-businesses (which are the majority of enterprises in Cambodia) not keeping accurate financial records, many are also family-owned and business owners often do not separate business from family money. Women entrepreneurs increasing their financial literacy also increases their agency in financial decision making as entrepreneurs.” Boyd said.

Boyd added that the business community also needs to understand and acknowledge that less than 5% of registered businesses in Cambodia are owned by women, even though over 60% of total businesses are women-owned.

“Although women are running the majority of enterprises, the vast majority of them are micro-sized and informal. If their revenue is relatively low or business is very small, then they may not have the capacity (or need) to formally register or apply for higher loans,” Boyd said.

She added, that while it may not be difficult now to register a business, thanks to a lot of work done by the MoC and government over the past five years to improve digital registration and access to information. However, managing a registered business is complex and expensive such as submitting a monthly tax return and understanding tax compliance.

“More businesses formalizing and entering the formal economy should be a priority and focus area for Cambodia, and collaborations such as this will help to make that happen. More formal businesses will mean improved economic development and availability of public services, upholding of labor rights,” Boyd said.

“Ultimately though this three-way collaboration looks positive to me and they’re right in saying that women need more financial literacy, skills, and access to formal (appropriate) finance,” she added.

A 2019 World Bank report found women own the majority of businesses in Cambodia (61%) of which 90% of the SMEs managed by women were profitable. In addition, most of them expect growth or at least stable development (84%) in the future.

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