Cambodia: Building a big future for small businesses

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Access to affordable financing is key in a country whose economy is driven by a veritable army of micro-, small and medium-sized entrepreneurs.

Man Phirun, 43, is a leading businessman in his community, generating annual sales revenues of US$500,000– US$600,000 from his  highly successful fish farm in Cambodia’s Kendal Province. When he started his enterprise five years ago, Man had only one pond with less than 20,000 fish. He operated the business with  the help of his wife and without any technical equipment. He was lucky if he made US$16,000–US$18,000 per annum.

Today, he owns seven hectares of land and operates five ponds containing over 500,000 baby fish. His business is partly mechanized and he employs a team of workers. 

With his new income, Man has been able to significantly improve his family’s living standards. As well expanding the land for his fish enterprise, he has purchased a plot for a family home, and bought several trucks for other businesses as well. In addition to vision and hard work, Man’s success can be attributed to a series of microcredits he obtained from Sathapana, one of Cambodia’s leading microfinance institutions.

OFID is supporting Sathapana through a joint financing facility with the Dutch development bank FMO. OFID’s share is being used
specifically to provide small-business loans to low income households in rural areas of Cambodia.

After receiving an initial US$15,000 in 2013, Man secured additional loans to continue expanding. “At first, I used the funds to buy fodder for the fish, then I bought a fodder mixing machine and another machine for water irrigation. This equipment has made my business more efficient and profitable,” Man said.

For now, Man is happy with the size of his fish farming enterprise, but he is keeping an eye on market demand to see if there is an opportunity for further expansion next year. If so it will be with Sathapana’s help.

Money talks … and empowers

As inspiring as Man’s story is, it is not unusual in Cambodia, where MSMEs (micro, small and medium enterprises) dominate the country’s economy, making up almost 90 percent of the total business establishments and accountingfor around 45 percent of employment. The majority of MSMEs are family-run  businesses, involved in the basic processing of primary produce for the domestic market. In order to grow, these enterprises need access to affordable financing. 

Specialist microfinance institutions like Sathapana play a vital role in providing financial services for the poor population in remote
areas, especially women entrepreneurs. Across Cambodia, around 80 percent of microfinance clients are women. In this spirit,
microfinance institutions are not only an essential and effective tool for reducing poverty but also a means of empowering women as the head of the family.

With one of the biggest branch networks in the country, Sathapana enables small business owners in rural areas to build assets,  increase incomes and reduce their vulnerability in economically difficult times.

“Sathapana is very close to its customers and focuses on helping its clients build successful enterprises,” explained Khalid Khadduri, OFID private sector officer in charge of the transaction. 

“Sathapana uses an innovative approach to reach its clients. They do not wait for people to visit their offices, but they rather visit their customers for lending and savings,” he added.  “This type of pro-activeness and close identification with their customers is what has made Sathapana so successful.”

With over 20 years of experience, Sathapana has built considerable expertise in microfinancing. The recent merger with its mother company Maruhan Japan Bank PLC, transformed Sathapana into a commercial bank. This not only allowed it to strengthen its 160-branch network but also to expand its product range and client outreach.

With the combination of the competencies and financial resources of the two entities, Sathapana Bank PLC will continue to develop
and expand its MSME portfolio and also support clients who grow from SMEs into bigger corporate entities.

For one fish farmer in Kendal Province, who knows what opportunities the future holds. Said Man: “I believe that Sathapana Bank is a true business partner, and also a good partner for the Cambodian people because it provides lending services that meet their requirements to achieve their goals. I hope that Sathapana can offer better and even lower interest rates in the near future.”