Cambodia has potential for social businesses

Despite challenges, Cambodia has potential for the establishment and expansion of social businesses, participants of the Microfinance & Social Business Conference in Phnom Penh said yesterday.

While social business in Cambodia is still in an early phase compared to microfinance, “Cambodia is a promising land” for such a concept, Jean-Luc Perron, managing director of the Grameen Crédit Agricole Microfinance Foundation, said.

“I think we are to expect that in five years’ time we will be in the position to talk about social business as we do today about microfinance.”

According to Christophe Forsinetti, founder of Devenco, social businesses in Cambodia still face challenges, including the fact that some do not have access to capital, there is a lack of technical and management expertise, and good governance. Other challenges include weak legal frameworks and little government and donor support.

But he said Cambodia is in a good position to be among the leading Southeast Asian nations in the field of social businesses.

Social business is a type of enterprise that has both a social and a business mission. Developed by Professor Yunus, Nobel peace prize laureate and founder of the Grameen Bank, social businesses aim to deal with a social problem, and their shareholders reject any personal gain.

While a social business still has to be viable and profitable, its profits are reinvested in the business to consolidate its social mission, according to Grameen Crédit Agricole.

“The core offerings of the business should create social value,” Michael Roberts, Cambodia country director for the international non-profit development organisation iDE, said. 

It should have balanced financial and social objectives, implying trading off financial profit for social benefit, he added.

IDE has helped establishing two social enterprises in Cambodia. 

One project, hydrologic, focuses on the production and distribution of affordable ceramic water filters while the other project, Lors Thmey or “New Growth”, focuses on helping small-hold farmers to become more successful by delivering high quality agricultural inputs and technical advice to the farmers.

Roberts said that because Cambodia is at such as basic level in many areas, for example agriculture, very small inputs can lead to big increases in value. 

According to Roberts, a bit of know-how and technology for a farmer can already create a lot of value on his farm. “So because it’s relatively easy to get the gains, I think that’s an opportunity for social business,” he said.

According to Christophe Forsinetti, sectors with a strong demand likely to be social businesses in Cambodia include clean energy, agriculture, education, environment, fair trade, health, housing, insurance, telecommunications, transportation and infrastructure as well as water and sanitation.  

Yesterday’s conference also included a plenary session on the challenges for Cambodian microfinance institutions to serve the agricultural sector, focusing especially on agricultural microinsurance.

Another  plenary session focused on a more responsible microfinance sector in Cambodia. Topics included client protection, financial transparency and the sustainability of microfinancing.

The conference was a joint event by the Cambodian Microfinance Association and the Grameen Crédit Agricole Microfinance Foundation and included speakers and delegates from Cambodia, France, India, Senegal and Bangladesh.