Agricultural loans fall to 31% from 36% in 5 years
Agricultural loans fall to 31% from 36% in 5 years
As Cambodia diversifies, share of agricultural loans in rural credit falls from 35.8 percent to 31 percent in five years, as per data with the National Bank of Cambodia (NBC).
Agriculture still remains the backbone of Cambodia’s economy. In 2023, as per the Ministry of Agriculture, Forestry and Fisheries, agriculture contributed 22 percent to Cambodia’s gross domestic product (GDP). While 22 percent is a substantial amount, it is still much less than the 36 percent it formed 10 years ago in Cambodia’s GDP in 2013.
Industries such as textiles, tourism, and SMEs and MSMEs in manufacturing, auto parts, furniture, plastics, electronic components have also gained traction in recent years.
Recent NBC data points to this diversification. One can see a shift in loan patterns, where credit is being sought for non-agriculture industries.
In 2023, 114 rural credit institutions (RCIs) had given 31.7 percent of their loans to agriculture, while the remaining 25.4 percent went for household needs, 19.1 percent for commerce, 8.1 percent for services, 3.9 percent for construction, 0.3 percent for transportation and 11.5 percent for other purposes.
Compare to this five years ago, when RCIs gave 35.8 percent of their loans to agriculture, 21.3 percent to trade and commerce, 16.3 percent to household needs, 13.5 percent to services, 0.4 percent to transportation, 5.9 percent to construction and 6.8 percent to other purposes.
As per a research-based opinion piece published by Dr Jayant Menon, Senior Fellow at ISEAS–Yusof Ishak Institute, Cambodia is diversifying its economy with more job creation in the form and informal sectors. He notes there is rural-urban migration from agriculture into industry and services. But that this might be reaching its limit.
RCIs particularly cater to low-income households, particularly to rural people with the operational networks to 3,640 locations.
RCIs — which are a type of institution providing small and microloans to customers — had total assets of $47.3 million and total loans of $40.5 million in 2023.
But since this is a small segment which can be prone to malpractice and higher than normal interest rates, NBC said it has been closing monitoring RCIs to ensure compliance and ethical practises.
In 2023, NBC terminated the licenses of as many as 109 RCIs.
This brings the total number of RCIs in the country to 114 in 2023, compared to 245 RCIs in 2019. Non-performing loans of RCIs have also been high at times; with the NPL rate hitting 10.6 percent in 2019.
