European Commission hands over €7.2 million
PRASAC Micro-Finance Institution to
Cambodia.
10
May, 2005
At a ceremony held today at the Ministry of
Economy and Finance, HE Mr. Keat Chhon,
Senior Minister, Minister of Economy
and Finance, and Ambassador
Friedrich Hamburger, Head of the
European Commission to the
kingdom of Cambodia, singed agreements to
bring to a conclusion the EC's "PRASAC"Rural
Development project with the transfer
Ambassador of EU Visited
PRASAC
of cash and assets valued at 7.2 million
Euro, (equivalent to about $9.4 million), to
PRASAC MFI, a privately owned Micro-Finance
Institution.
The PRASAC "project" started in 1995 and
delivered some 80 million Euro, (or over
$100 million), in aid to the people of
Cambodia. It was implemented in 6 provinces
of southern Cambodia - Prey Veng, Svey Rieng,
Takeo, Kompong Cham, Kompong Chhnang and
Kompong Speu. It comprised a number of
different activities, including irrigation,
roads, agricultural extension, community
development, enterprise development and
Credit. While the major part of the project
closed at the end of 2003, the European
Commission has continued to support the
transition of the PRASAC Credit Association
to a fully privatized Micro Finance
Institution delivering credit to around
55,000 customers in Cambodia.
The Credit component was
initially implemented as small Savings and
Credit Associations (SCAs), set up in local
villages throughout the southern provinces.
However, in 2000 the Royal Government of
Cambodia introduced legislation that
encouraged credit providers to form licensed
credit institutions for better control of
operators and for the benefit of the rural
poor. So it was decided to change the
project component to the PRASAC Credit
Association (PCA), registered as an NGO, and
duly licensed to provide credit in March
2002. Further work has been done to bring
the PCA up to the standards required for
registration as an authorised Micro Finance
Institution by the National Bank. From 1
January 2005, PCA operations have been
carried out by PRASAC MFI Ltd.
Ambassador Hamburger
said: "In all EC-funded activities, we aim
for sustainability and lasting impact.
PRASAC provided many new facilities and new
skills for large numbers of people in the
six Provinces it covered. I am delighted
that the establishment of PRASAC MFI Ltd.
will ensure continued support to rural
livelihoods in a wider area for many years
to come."
PRASAC MFI Ltd. is now
the second biggest micro credit operator in
Cambodia in terms of portfolio size and the
third in terms of client numbers. PRASAC MFI
Ltd has 13 branch offices, 31 sub-branches
and 7 service offices covering 10 Provinces,
629 Communes and 3,619 villages. It employs
289 professional and 79 support staff. By
the end of February 2005, PRASAC MFI was
serving about 55,000 clients, more than
68.5% of them female. Total assets are about
€7.2 million, including a revolving net
portfolio of about €5.8 million, with
€150,000 in reserves for loan losses, and
about €1 million in cash at hand and
deposits. PRASAC MFI does not accept savings
yet, but offers two types of loans:
Individual loans (max. 15 million Riel,
against physical collateral, up to 24
months) and Group loans (max. 500,000 Riel
with group or personal guarantee, for up to
12 months) for rural livelihood projects.
The present portfolio mix is about 56%
individual loans and 44% group loans.
