Phnom Penh (MMD Newswire) February 14, 2011 -- The Royal Government of Cambodia, the World Bank, and the International Finance Corporation (IFC) on Friday launched a financial program that will help improve access to credit for Cambodia's agribusinesses, a sector that is vital to the country's economic growth, poverty reduction, and job creation.
The program will mitigate the default risk that banks face when lending to Cambodian agribusinesses by guaranteeing 50 percent of loans that participating banks and microfinance institutions extend to the sector. It is expected to support up to US$50 million in new financing to private sector agribusinesses, such as rice millers.
The program is a collaborative effort between the Royal Government of Cambodia; IFC, the member of the World Bank Group focused on private sector development in emerging markets; and the International Development Association (IDA), the arm of the World Bank Group that provides interest-free loans and grants to help the world's poorest countries.
Improved access to finance for agribusinesses will provide strong support to Cambodia's economy since agriculture accounts for one-third of the country's gross domestic product and employs around 70 percent of the population, providing livelihood to the majority of poor people.
"Agriculture has emerged as an important source of growth for Cambodia," said Simon Andrews, IFC Manager for the Mekong Region. "By improving access to finance for agribusinesses, we hope to see an increase in total output for agri-processing in the country and thus foster job creation and growth of small and midsize enterprises."
Annette Dixon, World Bank Country Director for Cambodia, added: "Improving financing in the agriculture sector is vital for sustained growth and further poverty reduction in Cambodia. This initiative will encourage the development of more financial services in the rural sector, particularly for the poor, and it will provide strong support for the implementation of the country's rice sector policy. This is a good example of how government, the private sector, and development partners can collaborate effectively to strengthen private sector development in agriculture."
About the World Bank Group
The World Bank Group is one of the world's largest sources of funding and knowledge for developing countries. It comprises five closely associated institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), which together form the World Bank; the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world. For more information, please visit www.worldbank.org, http://www.miga.org/ , and http://www.ifc.org/ .