Letter from the CEO: Promoting Responsible Lending in Cambodia

Dear Partners,

Following the recent international and local press coverage of microfinance activities in Cambodia, Triple Jump would like to provide the following statement to address any concerns investors or the impact investing community may have.

As an impact-focused investment manager, Triple Jump’s mission is to provide capital where it empowers people and improves lives. Since the organization’s launch, Triple Jump has prioritized end-clients’ needs and well-being and offers strategic capital and technical assistance services to strengthen its investees’ capabilities. Furthermore, Triple Jump’s efforts expand beyond its own operational scope and include concerted efforts to collaborate and work with key stakeholders in the global microfinance community. As part of the Social Performance Task Force (SPTF), Triple Jump plays a leading role in the development and promotion of responsible practices among investors.

Since attaining peace in 1991, Cambodia has focused on rebuilding the nation and its economy. Thanks to rapid and sustained economic growth, Cambodia has become one of the world’s leaders in poverty reduction. The government recognized from the outset the important role of microfinance in socioeconomic development and has implemented a national microfinance strategy since 2001. Triple Jump first invested in Cambodia in 2004 and from the start has worked hard to promote best practices among financial institutions. Our approach has been to engage into a firm dialogue with our investees to promote acceptance and implementation of responsible lending practices.

Over the years, the microfinance market has shown strong growth resulting in positive financial and welfare impacts for households in Cambodia as evidenced by a recent World Bank report. The sector has provided access to formal credit for a large segment of borrowers who previously depended on informal lenders, enabling the development of entrepreneurial activities and improving the overall living standards of the poor. However, with the remarkable growth of microfinance, household debt levels have increased significantly over the past decade as the average loan size to borrower grew faster than household income. The pursuit of growth in an environment of intense competition has also led to more aggressive and sometimes deteriorating lending practices among certain microfinance institutions.

Triple Jump has been very closely monitoring how financial institutions in Cambodia are addressing the increased risk of over-indebtedness. In 2014, we joined forces with a small group of investors to support the creation of the Microfinance Index of Market Outreach and Saturation (MIMOSA), a new framework for measuring credit saturation and guiding investment decisions to avoid overindebted markets. MIMOSA’s first report in 2015 described Cambodia as one of the world’s most saturated credit markets. Since then, and in addition to our standard and rigorous assessment of social performance management and client protection standards, each institution we finance in Cambodia goes through a deeper review of responsible lending practices specific to the market context. As an endorser of the Responsible Lending Guidelines which have been built on the MIMOSA framework and are promoted by the Cambodian Microfinance Association (CMA), Triple Jump systematically assesses the level of multiple and parallel loans in its partners’ portfolios and the extent to which the partner refinances existing loans with larger amounts. This assessment allows us to identify and select the more responsible institutions and monitor their growth on a continuous basis.

From supporting eight Cambodian microfinance institutions in 2015, Triple Jump has reduced its exposure to five carefully selected institutions which meet Triple Jump’s social performance standards. We see a continued need to support these institutions as they broaden their product offer and target clientele, which is why we remain active in Cambodia on a very selective basis.

Triple Jump is committed to ensuring policies and practices are aligned with international best practices and takes its strong social mission seriously, while recognizing improvements and enhancements can continually be made. Please feel free to contact us if you require any additional information, and we thank you for your on-going support and partnership.


Steven Evers

Triple Jump CEO

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