The Transparent Pricing Initiative in Cambodia has published standardized pricing data from 14 microfinance providers, representing the majority of Cambodia’s microfinance borrowers. Launched in 2009 the Initiative is delivered in partnership with Planet Rating and is funded by the Netherlands Plaform for Microfinance. The initial data collection was sponsored by MicroNed and TripleJump and supported by key local stakeholders including the Central bank of Cambodia and local network organizations.Microfinance in Cambodia
Although the flow of foreign funds to the sector was affected by the global financial crisis in the late 2000s, the Central Bank’s permission to mobilize local deposits by registered MFIs has helped the recovery of many fund strapped microfinance institutions.
The regulatory and supervisory environment of the Cambodian microfinance market has played an integral role in the transformation and growth of the sector. Since 2000, registered deposit taking microfinance institutions have been prudentially regulated by the Central Bank of Cambodia. Through outlawing the use of the flat interest rate calculation method in 2001, the Central Bank has played an instrumental role in fostering healthy competition and promoting transparency in the microfinance market. The legislation ‘Prakas on calculating interest rate on microfinance loans’ requires all registered microfinance service providers to employ the declining balance interest rate calculation method.
The price graph presented below shows the prices of all the microloan products in the Cambodia dataset. Each data-point represents a real loan given to a real borrower, calculated using original loan documentation from the institution. The size of the data-point correlates with the number of borrowers that have a loan of that product at that loan amount. The color of the data-point correlates with the Transparency Index of the sample. The interactive legend beneath the graph can be used to change the graph axis and labels. Try the custom feature to see price correlations with attributes such as loan purpose, institution type, loan term and percent of gross national income.
Loans in Cambodia can be issued in three currencies – Cambodian Riel (KHR), Thai Baht (THB) and US Dollars (USD). Products in each of these currencies are shown on separate graphs.
The market average APR curve is relatively flat showing a limited range in price relative to loan size. This is mainly due to improved efficiency and competition among microfinance institutions. One of the interesting features of Cambodian microfinance is the relative absence of extra charges in fees and commissions. This, together with the outlawing of flat interest rate shows that the industry has been practising a high level of transparency in its pricing.
|Institution||# Borrowers||Portfolio (US$)||Products||Transp. Index||Participating Since||Age of Data|
|Farmer Finance||200||407,000||1||79||2010-Sep||72 mos.|
|First Finance||500||5,819,000||1||71||2010-Sep||72 mos.|
|VF Cambodia||148,600||48,984,000||18||98||2010-Sep||72 mos.|