Cambodia Investment Review

Give a Day: Credit Guarantee Schemes & Its role in Enterprise Development

Give a Day: Credit Guarantee Schemes & Its role in Enterprise Development

Aaron Woolner 

The 11th Give a Day has featured the Credit Guarantee Corporation of Cambodia as its keynote as well as enabled Cambodia’s entrepreneurial ecosystem to connect at the new Khmer Enterprise Headquarters for the first time in 2023.

Khmer Enterprise CEO Dr. Chhieng Vanmunin delivered the welcoming remarks highlighting the ongoing progression of the initiative which was first piloted in 2021 before receiving its full funding for monthly and quarterly meetings in 2022 and has now been renewed for 2023.  

Read more: Give A Day the Appreciation gathering and discussing the way forward in 2023

“The Give a Day monthly meetings and quarterly ecosystem builder events have been greatly welcomed by Cambodia’s entrepreneurial community – and have provided both learnings and networking opportunities between various sectors,” he told over 50 attendees from the ecosystem at KE headquarters.

Sabine Joukes Pact Cambodia Country Director and WE Act Chief of Party, Khmer Enterprise CEO Dr. Chhieng Vanmunin, Rajiv Pradhan Country Director at Swisscontact in Cambodia.

“We also wanted to welcome everyone to our new headquarters at the Business Development Center in Chroy Changvar, Phnom Penh, and advise that our open working space is available to everyone in the ecosystem as well as both our meetings’ rooms and event space,” he added.

Rajiv Pradhan Country Director at Swisscontact in Cambodia and Sabine Joukes Pact Cambodia Country Director and WE Act Chief of Party echoed this statement adding it was fantastic to reconnect the ecosystem for the first time in 2023.

Increase credit guarantee issuance by 50% in 2023

Delivering the keynote CGCC CEO, Wong Keet Loong commented the scheme was looking to increase the number of transactions it underwrites by 50% in 2023 as the organization looks to increase its outreach to the country’s micro and small and medium businesses, (MSMEs).

CGCC received its sub-decree on September 2020 and was fully incorporated in November 2020 its guarantees are intended to expand the availability of credit to smaller enterprises that may not have the collateral which banks typically require to advance working capital loans. 

Conversations after the keynote presentation.

Initially launched as a tool to close the credit gap that emerged between small businesses during the pandemic, the CGCC issued its first guarantee in April 2021 and has since given a total of 985 Letters of Guarantee (LG) for loans worth $92.7. Mr Loong said that the CGCC had even more ambitious targets for 2023. 

“My biggest goal for this year is to increase the outreach of our guarantees. The CGCC wants to provide guarantees to 1500 SMEs this year. We want to guarantee $100 million of loans in 2023. I know that is optimistic but I believe it can be done,” he said in response to a question from Cambodia Investment Review. 

Rising interest rates may impact growth

Mr Loong said that the main barrier to reaching this target was the global macro picture, particularly the impact of rising US interest rates. 

“The main issue right now is that external factors are affecting the cost of funding, which is going up as US interest rates rise and this is affecting a number of financial institutions (FIs). They see that fixed deposit rates are going crazy which is good for depositors, but not FIs and this impacts their lending,” he added.

Attendees at the 11th Give a Day.

Global factors may act as a drag on the CGCC’s work in the near term, but fellow speaker H.E. Dr. Chhieng Vanmunin, CEO of Khmer Enterprise, said that if credit guarantees become more widely used in Cambodia it would make it much easier for firms to do business internationally. 

“In their current state, a lot of Cambodian companies are unable to demonstrate a track record of success, however, if they run through the credit guarantee program with CGCC it provides a history of how well they managed issues such as shipping and cash flow. 

So this is one of the things that we support them to expand their market internationally,” he said. 

40% of its guarantees go to female-owned businesses

The CGCC currently offers four different guarantee products and in April last year, it launched it’s third the Women Entrepreneurs Guarantee Scheme (WEGS), a $50m capped fund that is aimed at supporting women and female-owned businesses. 

According to the CGCC’s data up to 40% of its guarantees go to female-owned businesses, whereas Mr Loong said that up to 65% of Cambodian MSMEs were run by women. An audience member, who didn’t identify herself, suggested that this gap was partly due to issues over lack of financial knowledge. 

Read more: CBC and CGCC ink partnership to promote SME and women’s access to finance

“One reason is that we know most women entrepreneur’s businesses are not registered and one way to improve that is via financial literacy, and this will have many benefits. If financial literacy is growing then entrepreneurs are more confident, more informed, and able to negotiate good loans,” she said.  

Questions and answer session.

Mr Loong responded that the CGCC did support unregistered businesses, for the first year at least and that expanding awareness of credit guarantees should in turn increase the number of registrations by female business owners. 

“However, we tell customers that you need to be registered after a year, because when the anniversary comes, if you’re not registered, then we charge you an additional 0.5%. So, in a way, it incentivizes businesses to be registered. But when they come on board, they can be unregistered,” he said. 

The Give a Day program returns in 2023

Give a Day is an initiative within the Entrepreneurship Ecosystem Building Project (EEB) which is jointly funded by Khmer Enterprise, USAID’s WE Act Project through Pact Cambodia and Swisscontact. 

In addition, to monthly meetings, the initiative also included a quarterly Ecosystem Builders Network (EBN) event that focused on mapping the six pillars of Isenberg’s Model of the Entrepreneurial Ecosystem.

The 11th Give a Day program at Khmer Enterprise Head Office on February 10, 2023.

The quarterly meetings created a space through which ecosystem builders and government agencies can share information, foster best practices, identify market gaps and opportunities, and explore collaboration or complementarity to strengthen the ecosystem.

Read more: Cambodia’s entrepreneurial ecosystem strengthening is underway with CAMESCO

Cambodia’s ESO ecosystem, broadly defined as groups that support, train, and fund entrepreneurs is still in the nascent stage with many new organizations launched to help nature and develop the sector.

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