HKL: A loan to support financing for Cambodian SMEs in rural areas

HKL has been a client of PROPARCO since 2011.

HKL is Cambodia’s 4th largest microfinance institution in terms of portfolio size and the 7th largest for the number of clients.

Its strategy focuses on the upper microfinance segment (average loan of USD 2,500, only individual loans). Over 25% of its portfolio exposure is in the agricultural sector and almost 4 out 5 branches are in rural areas.

HKL stands out from other MFIs through a strategy firmly focused on SME financing, which will account for 18% of the portfolio by 2019. HKL is also a strongly “dollarized” institution, like Cambodia’s economy: 87% of loans and 88% of deposits are denominated in USD. HKL’s equity is also denominated in USD.

PROPARCO has allocated a USD 8m credit line to the microfinance institution HKL to support the development of its loan portfolio.

The financing will promote access to microfinance products and services for rural populations in Cambodia, particularly women, who account for 69% of borrowers.

The project will support employment and training for local populations, with some 5,000 direct or indirect jobs created or maintained, a third of which will be held by women.

The project will have positive impacts on the mobilization of savings, as well as on the diversification and allocation of credit.

Finally, the project will contribute to private sector development in Cambodia, particularly for small businesses operating in the trade, agriculture and service sectors.

The project will thereby contribute to Sustainable Development Goals 8 (Decent work and economic growth) and 10 (Reduced inequalities).