NATIONAL BIO-DIGESTER PROGRAM (NBP) BIO-DIGESTER LOAN DEVELOPMENT AND PERFORMANCE, AMRET MFI, CAMBODIA NOVEMBER 20-22, 2012

Presented by: Thorninn Sean, Head of Financial Services, Amret MFI

CONTENT
I. Amret MFI- Brief Biography II. Bio-digester Development
1. 2. 3. 4. Story Bio-digester Credit Facility Bio-digester Loan Performance Key Challenges and Overcomes

I. AMRET MFI
Founded in 1991 as a project under GRET, a French NGO, for delivering microcredit (Solidarity Credit) to the rural population of Cambodia. In 1996, GRET helped transforming the project to become an NGO, called EMT, Ennatien Moulethan Tchonnebat, which means rural microcredit. In 2001, EMT registered as MFI from the National Bank of Cambodia (NBC). In 2004, ETM officially changed to Amret, in local language conveys the notions of prosperity, sustainability and happiness. In 2009, Amret was the first microfinance institution to receive a Micro Deposit-taking Institution (MDI) license from the National Bank of Cambodia for collecting deposit from public.

Vision and Mission

Vision
"To be an outstanding financial institution that improves the living standards of the population and contributes to the economic and social development of Cambodia".

Mission
"To provide a wide range of financial services for low income people as well as micro, small and medium enterprises while at the same time achieving a high level of financial and social performance".

Summary Data: by September 2012

No.
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Item
Operating

Description
o Offices: 98 o Provincial coverage, including Phnom Penh Capital: 17/24
o Total staff: 2,366 o Credit (Individual Credit, Solidarity Credit, Biodigester Credit) o Deposit (Saving and Fixed Deposit) o Inter-branch Money Transfer (IMT) o Loan outstanding: USD 129.3 million o Number of active borrower: 287,903 o Portfolio quality: PAR (>30 days) = 0.10% o Balance of Saving: USD 77.3 million o Number of Account: 73,404

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Staff Products

Loan Portfolio Saving Portfolio

II. BIO-DIGESTER LOAN DEVELOPMENT

1. Story
MoU signed with the National Bio-digester Program (NBP) of the Ministry of Agriculture, Forestry, and Fishery, Cambodia, in early 2009. The purpose: to develop the Biogas Credit Facility for financing the potential farmers for building the household sized bio-digesters at rural area. Under the support funding (concession loan) from FMO, the entrepreneurial development bank of Netherland, the Bio-digester Credit product was developed and started its pilot test in June 2009. After the successful pilot test for three months, the product then was rolled out among all Amret branches in September 2009.
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II. BIO-DIGESTER LOAN DEVELOPMENT

2. Bio-digester Credit Facility (1/4) Description
Loan Purpose o Support financing to rural households who want to build the bio-digester plant for improving their household economy and health. o The low or middle income households who are residing in the villages, districts or provincial towns, and having at least 2 adult cows or 6 pigs or be able to collect excrement of animal 20 Kg per day

Target Clients

II. BIO-DIGESTER LOAN DEVELOPMENT

2. Bio-digester Credit Facility (2/4)
Description
Product features o Loan size: 150 USD to 1,000 USD (mainly base on the real cost of plant construction and equipment). Average loan size is 500-600 USD. Subsidy of 150 USD per plant from NBP (will be credited to the clients account when the plant construction is finished with technical verification) Loan disbursement: at clients house Loan duration: 3 to 24 months according to the clients real cash flow Loan repayment: at clients house as monthly interest and principal installment Grace period: 1-3 months Interest rate: 1.2% p.m (lowest comparing to other loan types about 2.5%)
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o o o o o

II. BIO-DIGESTER LOAN DEVELOPMENT

2. Bio-digester Credit Facility (3/4)
Description
Product features o Key eligible criteria: Legal permanent residence having at least 2 adult cows or 6 pigs or be able to collect excrement of animal 20 Kg per day (with verification of feasibility study of bio-digester plant construction from biodigester technician) Collateral must cover the loan amount at least 150% (guarantor's collateral can be substituted) At least one source of regular income for ensure the capacity of repayment

II. BIO-DIGESTER LOAN DEVELOPMENT

2. Bio-digester Credit Facility (4/4)
Description
Assessment Process o Day1: Bio-digester loan application (with feasibility verification from bio-digester technician) Day2-5: Visiting client and loan assessment period (from Amret credit officer) Day6-7: Loan approval/rejection decision period to inform client and stakeholders (biodigester technician and NBP officer) Day8-10: Disbursement period

o o

Note: from our observation, there is less rejection of the loan applications so far. Those rejections mainly due to the households cannot fulfil our requirement, basically no sustainable source of income for loan repayment.
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II. BIO-DIGESTER LOAN DEVELOPMENT

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II. BIO-DIGESTER LOAN DEVELOPMENT

3. Bio-digester Loan Performance

Loan Accounts increased sharply in 2010 (613%) and 2011(165%), but it looked slow for 9 months of 2012 due to the down season (raining) during the Q2&3. Among the total bio-digester plants of 4,826 constructed (of which 3,034 are funded via loan), Amret lent 1,782 plants (about 59% of total plants funded via loan, or about 37% of total plants constructed). (NBP Annual Report 2011) 12 PAR for this loan is almost Zero!

II. BIO-DIGESTER LOAN DEVELOPMENT

4. Key Challenges and Overcomes (1/2)
Key Challenges 1 Hard convincing and building trust among the households at communities due to: (a) limited understanding of the benefits of bio-digester at communities, (b) limited service quality from bio-digester technicians and NBP officers during and after construction Overcomes More awareness campaigns (i.e. workshop at communities, radio/TV advertisement) done by NBP and Amret Explanation done by Amrets sale force Capacity development enforcement for construction technicians and NBP officers (done by NBP and related experts). Plant quality assurance by construction companies need to be made. Expansion of sale network at clients communities done by NBP

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II. BIO-DIGESTER LOAN DEVELOPMENT

4. Key Challenges and Overcomes (2/2)
Key Challenges 2 Lack of communication and relationship between Amret sale staff and NBP Officers and technicians, at communities. 3 Overcomes Set up representative teams of each stakeholders for dealing with related issues Enforcement of regular meeting (i.e. quarterly, annually) among stakeholders.

Less motivation of sale staff due Direct incentive offering (3USD per plant) Indirect incentive base on their loan to less incentive portfolio and portfolio quality.

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THANKS FOR YOUR ATTENTION!

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