Cambodia has a population of more than 15 million people of which 80% are living in the rural areas. Cambodia has been experiencing high economic growth and an improvement of living conditions thanks to the development of the global and sub-regional market particularly expressed through the progress of tourism and the increase of textile factories in the capital Phnom Penh. However, the lack of access to water and electricity in rural areas remains a challenges and its improvement could play a major role in the development of and poverty reduction in Cambodia.
The feasibility studies, conducted under AFD’s financing and supervision, have identified potential for financing Rural Electricity Enterprises (REEs) and Small Water Enterprises (SWEs), which are currently constrained by financial and non-financial barriers to develop their business through commercial loans. In this context, AFD is implementing a comprehensive programme to support the strategy of Cambodia for Rural Electrification and the development of piped water networks in small towns and rural areas in Cambodia and which promotes the financing of these Small Enterprises (SEs) by dealing with all identified barriers for a sustainable access to commercial loans by REEs and SWEs.
The program includes several components:
- A credit facility of 15 million USD to the FTB to finance REEs and SWEs in small towns and rural areas in Cambodia;
- A technical assistance (TA) program for the FTB mainly dedicated to improve the technical skills of the bank to appraise and finance such projects;
- A capacity building program (“the CB Program”) to support REEs and SWEs in developing bankable projects and in improving their management and business operations. The CB Program will be directly managed by AFD;
- An investment grant program (“the IG Program”) to SWEs to improve the financial profitability of their business operation and increase households’ access to clean water.
The AFD program will contribute to a number of Royal Government of Cambodia’s objectives:
- The Cambodian national policy on water supply and sanitation (“the private sector shall be encouraged to be involved in all areas of service provision”).
- The Cambodian Millennium Development Goals (in 2015 the proportion of people without sustainable access to safe drinking water will be 50%).
- The Cambodian national Priorities for Rural Electrification Development Program (“all villages in the Kingdom of Cambodia have access to electricity of any type by the year 2020 and at least 70% of all households have access to grid quality electricity by the year 2030”).