MIGA Strengthens Financing Capacity for Small Businesses in Cambodia
WASHINGTON DC, April 25, 2022 — MIGA has issued a three-year guarantee totaling $300 million to the National Bank of Canada (NBC) for equity into its subsidiary in Cambodia. The MIGA-enabled infusion will allow the subsidiary, Advanced Bank of Asia Ltd (ABA), to provide additional credit to support micro, small, and medium enterprises (MSMEs).
The economy of Cambodia, in particular key growth drivers such as the garment industry and tourism, was impacted by the COVID-19 crisis. Real GDP contracted by 3.1 percent in 2020, the first contraction since 1994.
MIGA’s guarantee, part of its continuing COVID-19 response program, will support lending for MSMEs—including those led by women—to support business development as economic growth returns to pre-pandemic levels. Women play a critical role in Cambodia’s economy, where 97.6 percent of businesses are micro enterprises and 2.2 percent are SMEs. Cambodian women own 62 percent of the micro businesses and 26 percent of the small or medium enterprises, but only three percent of female entrepreneurs have access to formal credit.
“As Cambodia aims for pre-pandemic levels of growth, financing is essential—especially for smaller enterprises,” Hiroshi Matano, Executive Vice President, said. “MIGA’s guarantee—a globally-accepted efficient regulatory tool for optimizing capital consumption—will strengthen the resilience of these enterprises by increasing their access to credit.”
ABA is one of the largest banks in Cambodia with an established record of lending to MSMEs. Loans to MSMEs and corporates account for over 95 percent of ABA’s total loan book. One of ABA’s strengths is its advanced digital banking technology, which positions it strongly to lend to MSMEs because 78 percent of Cambodians use digital technologies. The Bank intends to leverage its digital platform and lending business process to narrow the country’s financing gap for MSMEs.
“Micro, small, and medium enterprises play a critical role in the Cambodian economy. The MIGA guarantee will help ABA sustain their continued growth in Cambodia. We are happy to have secured this constructive guarantee,” said Ghislain Parent, Executive Vice-President, International, NBC.
This is MIGA’s first capital optimization guarantee for a North American bank and the first time for a host country in Asia.
With CDN$367 billion in assets as of January 31, 2022, National Bank of Canada, together with its subsidiaries, forms one of Canada's leading integrated financial groups. The Bank has more than 27,000 employees in knowledge-intensive positions and has been recognized numerous times as a top employer and for its commitment to diversity. Its securities are listed on the Toronto Stock Exchange (TSX: NA). Follow the Bank’s activities at nbc.ca or via social media such as Facebook, LinkedIn, and Twitter.
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war and civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued over $65 billion in guarantees across 120 developing countries.
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