MAY KUNMAKARA
Digital finance could potentially boost Cambodia’s gross domestic product (GDP) by six percent, according to a report yesterday.
The report, titled “Accelerating Financial Inclusion in Southeast Asia with Digital Finance” written jointly by the Asian Development Bank (ADB) and consulting firms Oliver Wyman and MicroSave, said digital financing could play a significant role in supporting financial inclusion for sustainable economic development in Cambodia.
It added that digital financing could address up to 40 percent of unmet demand for payment services well as 20 percent in unmet credit needs.
“We estimate that the cumulative effect of digitally driven acceleration in financial inclusion could boost GDP by two percent to three percent in markets like Indonesia and the Philippines, and six percent in Cambodia,” the report read.
“For the population earning less than $2 a day that would translate to a 10 percent increase in income in Indonesia and the Philippines, and an increase of around 30 percent in Cambodia,” it added.
The report added that Cambodia’s financial inclusion landscape remains highly skewed.
The report’s authors pointed out that though the kingdom has made significant progress in improving credit access for some of its poorest citizens, many still remain unbanked.
“The recent trend of mobile payments for domestic money transfer services, through the active participation of microfinance institutions [MFIs], has seen some 33 percent of adults having received money through such a service last year.
“On the other hand, however, only 13 percent of adults in Cambodia have bank accounts and fewer than four percent save with a formal institution.”
Added the report: “None of the mobile money service providers currently offer savings products, and none of the MFIs have been able to develop a large network of agents to help mobilize micro-deposits.”
It also said that the National Bank of Cambodia is working on a payment service provider license that could augment or replace the existing license requirements for third-party processors, 36 of which restrict non-bank players’ ability to operate agent networks.
According to the report, Cambodia’s progress in financial inclusion has yielded mixed results so far. While few Cambodians had bank accounts, the report said 28 percent of Cambodian adults borrowed money from a formal financial institution over the same period – a rapid increase from 19.5 percent in 2011.
“Digital enablement can be a powerful part of this solution. We estimate that corresponding digital applications and related regulatory initiatives could boost GDP by about six percent, produce more than $1.7 billion in additional electronic payment flows, lead to more than $500 million in savings.”
The report studied the financial sectors of four Southeast Asian nations namely Cambodia, Indonesia, Myanmar and the Philippines by interviewing more than 80 stakeholders.
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