PHNOM PENH, CAMBODIA (18 November 2016) — The Asian Development Bank (ADB) has approved a $40 million loan and a $600,000 technical assistance grant to help strengthen Cambodia’s financial sector and promote financial inclusion within the country’s unbanked population.
“Cambodia’s economy has been performing well but achieving inclusive growth has been a challenge, particularly among people who don’t have access to formal financial services,” said Hiroyuki Aoki, Senior Financial Sector Specialist at ADB’s Southeast Asia Department. “The project will help the Cambodian government to develop its financial sector to reduce financial exclusion and promote inclusive growth.”
Cambodia’s impressive economic growth over the past several years has pushed poverty levels from 47.8% in 2007 to 13.5% in 2014. Still, many people are vulnerable to poverty, particularly those in rural areas — where 90% of poor people live — and the 41% of the population living on $2 a day or less. The financial sector should be further developed, with only 59% of the population having access to formal finance, and about 30% of the adult population excluded from any form of financial services.
The Inclusive Financial Sector Development Program (IFSDP) will help to bring these people into formal financial services by supporting the development of an efficient and stable financial sector. Policy support and enhanced consumer protections will be expected to benefit rural households, farmers, and small and medium-sized enterprises. The program will upgrade existing financial sector infrastructure to support the introduction of new services and products.
ADB’s loan and technical assistance grant is for the first of three subprograms under the IFSDP. When implemented, the program is expected to produce potential economic gains of up to $391.2 million a year, or 2.3% of the country’s GDP.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.