USD 15 M loan to AMK

Brussels-Phnom Penh, 3 July 2023 - BIO, the Belgian Investment Company for Developing Countries, is proud to announce its commitment of a USD 15 million subordinated loan to Angkor Mikroheranhvatho Kampuchea Co., Ltd (AMK). AMK, one of Cambodia's leading deposit-taking microfinance institutions (MFIs), will use the funds to bolster its solvency base and facilitate the expansion of its portfolio.

This investment marks BIO's return to Cambodia, reflecting the institution's confidence in the positive evolution of the Cambodian microfinance industry since BIO's departure in 2016. With its exceptional compliance with social standards, AMK has emerged as a deserving recipient of investment.

The Cambodian microfinance industry has witnessed significant progress, playing a pivotal role in the country's economic development and poverty reduction initiatives. Noteworthy advancements include the establishment of a robust regulatory framework, ensuring stability, transparency, and accountability. Increased outreach and accessibility have enabled more individuals, particularly those residing in rural areas, to access vital financial services, empowering them to invest and enhance their livelihoods. Microfinance institutions have expanded their product offerings beyond microcredit, encompassing savings accounts, insurance products, and remittance services. Technological innovations have revolutionized efficiency and accessibility, facilitating mobile banking and digital financial services even in remote regions. Emphasis on social performance and client protection has been heightened, promoting responsible lending practices and financial literacy programs. Capacity building and governance efforts have improved risk management and corporate governance practices. Collaborations and partnerships with diverse stakeholders have bolstered financial inclusion programs and responsible finance practices. These collective improvements have significantly contributed to expanding financial inclusion, reducing poverty, and fostering sustainable economic growth in Cambodia, as the sector continues to evolve.

AMK, as one of Cambodia's most socially responsible microfinance institutions, operates across more than 13,200 villages, exhibiting an extensive geographical reach and serving a customer base of 400,000. The institution offers loans, deposits, micro-insurances, and transfer services. Notably, AMK's loan portfolio predominantly consists of small loans tailored for women (70%) residing in rural areas (96%).

AMK is deeply committed to making a positive impact on the communities it serves. The institution's unwavering dedication to Customer Protection Principles has earned it a gold certification and a formidable reputation. Recognizing the crucial significance of social performance in Cambodia, BIO has developed a specialized Environmental and Social Action Plan (ESAP) for this project. The ESAP ensures that AMK will:

• Maintain its Social Performance Committee at the board level
• Uphold the Gold Level Client Protection Certification
• Comply with the Lending Guidelines and the Banking and Financial Institutions Code of Conduct

BIO will incorporate specific monitoring of the risk of over-indebtedness through monthly reporting and is actively designing technical assistance programs to promote responsible lending. While BIO acknowledges the saturation and oversupply of the loan market in Cambodia, it recognizes the persistent challenges faced by impoverished households and less formalized companies in accessing small loans, uncollateralised MSME loans, and SME loans, particularly for agricultural projects. These segments constitute the primary target customer base for AMK.

BIO has consistently played an active role in promoting client protection principles within Cambodia's microfinance sector. In 2016, alongside four other impact investors (ADA, FMO, Incofin, and Proparco), BIO supported the Cambodian Microfinance Association (CMA) in developing lending guidelines aimed at preventing over-indebtedness. The project aimed to establish fair and ethical lending principles, widely adopted by all CMA members (Cambodian Microfinance Association), while defining a comprehensive set of indicators for monitoring purposes. This collaborative effort involved external microfinance expert consultants and the Cambodian credit bureau, established in 2012.

BIO's commitment to AMK signifies a significant milestone in fostering sustainable economic growth and reducing poverty in Cambodia. By providing essential support to the microfinance sector, BIO aims to empower individuals, enhance financial inclusion, and drive long-term development.

For media inquiries

Ben Jehaes

External relations manager
ben.jehaes@bio-invest.be