NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, July 13, 2016

Banking industry insiders expressed concern yesterday over a spike in the amount of delinquent debts reported by microfinance institutions (MFIs) across the Kingdom, which they attributed to farmers struggling to repay their loans after adverse weather conditions affected their crops.

Speaking at an industry workshop, Hout Ieng Tong, chairman of the Cambodia Microfinance Association (CMA), said with about $3 billion in micro loans outstanding, the ratio of delinquent loans has doubled since January. Total loan portfolio at risk (PAR) – the share of loans where payments are more than 30 days overdue – has risen to slightly over 1 per cent, from 0.5 per cent at the start of the year.

“Loans in the agricultural sector account for about 30 per cent of all lending in the microfinance industry, and this sector was seriously affected by drought in April and May,” he said, explaining that drought reduces farmers’ cash flow and makes it more difficult for them to make their loan payments.