Cambodia Study Tour: How can MFIs and banks better serve agricultural clients?


The World Bank's Agricultural Finance Support Facility (AgriFin) in cooperation with Amret, a microfinance institution in Cambodia, organized a study tour for microfinance institutions (MFIs) and banks from outside Cambodia interested to learn about innovative agricultural finance practices in order to expand their agriculture finance business line.

The study tour was held from July 20-24, 2015. Twenty agriculture financiers from eleven countries participated in the study tour. The event offered an opportunity for participants to learn in detail about Amret’s agricultural lending activities and the process it undertook to develop its newly launched agricultural loan product. Participants visited rural branches and also witnessed how Amret has been utilizing mobile technology to expand its rural penetration. Attendees had the opportunity to meet Amret’s agricultural clients to discuss their experiences of utilizing Amret’s financial services. The event provided participants with the opportunity to engage not just with Amret and their clients, but also with other participants, and thereby build new relationships with a global group of finance professionals.

Summary of Lessons Learned

Amret is a leading financial institution serving agricultural clients in Cambodia. Historically, Amret has been providing microloans to individual farmers and farmer groups averaging US$572 per loan. While its microfinance lending business served some segments of agricultural clients, AMRET’s ability to reach commercially-oriented farmers was constrained by its microfinance lending approach. The small size of the loan, coupled with monthly repayment requirements and short tenor were not suitable for larger farmers.

To improve upon its product offerings to commercial farmers, Amret partnered with the World Bank’s Agriculture Finance Support Facility (AgriFin) to design new agricultural loan products and expand its agriculture finance business line. To this end, Amret received technical assistance support from AgriFin that resulted in new agricultural products and improved institutional capacity to serve commercially-oriented agricultural clients. In June 2013, Amret designed and rolled out the new “Agri-Loan” product which finances the working capital needs and investment requirements of commercial farmers. Key features of the new loan product included: larger loan sizes; longer loan tenures; and flexible repayment schedules tailored to cash flow.

By the third quarter of 2015, Amret’s “Agri-Loan” portfolio had exceeded US$58 million contributing to a 40% growth of its total agricultural loan portfolio, with average loan sizes of approximately ten times that of Amret’s traditional agricultural sector loans. The new loan product has helped Amret significantly expand its agricultural lending portfolio, while reducing transaction costs per loan, and simultaneously maintaining excellent loan quality/portfolio performance.

Several factors have contributed to Amret’s success in launching its new agricultural loan product, including thoughtful product design based on market assessment, a revised lending methodology, development of new delivery channels including mobile banking, and investment in the training and capacity building of its staff to assist them in working with agricultural clients.

Amret’s experience demonstrates that is it is possible for MIF’s to expand their product offerings to serve larger agricultural clients through tailoring of new products to these segments. In order to share these experiences more widely, AgriFin collaborated with Amret to facilitate a study for agricultural banking and MFI professionals from eleven countries. This document, provides an overview of the visit and details on the key lessons learned.​

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