The AFD launched the Access to Finance Program for Small Water and Rural Electrification Enterprises (SWEs-REEs). Program ambitions are to promote the financing of Small Enterprises by dealing with all identified barriers for a sustainable access to commercial loans by REEs and SWEs. This program aims in particular at: – Expand access to safe drinking water and electricity in small towns and rural areas by providing adequate financing to REEs and SWEs through loans provided by a local commercial bank (Foreign Trade Bank “FTB”); – Help FTB to develop an attractive financial offer for REEs and SWEs; – Support FTB to develop its portfolio of water and electrification projects and to perform due diligences, in order to ensure the sustainability of this new business line; – Support REEs and SWEs in developing their business and enhancing their business practices to a level suitable for financing by FTB.
It will also contribute to support:
i) 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”).
ii) the Cambodian national policy on water supply and sanitation (“the private sector shall be encouraged to be involved in all areas of service provision”) and the Cambodian national targets (85% of people with sustainable access to safe drinking water in urban areas in 2018 and 65% in rural areas).
The promotion of the private sector participation is one channel to be used to achieve the goal.
In March 2014, the AFD has provided to the Foreign Trade Bank (FTB) a concessional credit facility (the “Credit Facility”) and a risk-sharing mechanism called ARIZ dedicated to financing SEs in the water supply and electricity sectors in small towns and rural areas of Cambodia. The European Union (EU), under its Asian Investment Facility (AIF), has also provided AFD a grant for the use of the Program, especially to finance three components: i) Component 1- Technical Assistance to FTB to implement the Credit Facility; ii) Component 2- Capacity Building for REEs and SWEs to access financing from FTB and to improve business performance; iii) Component 3- Incentive investment grants. The credit facility is sized at 10 million USD on electricity and a minimum of 5 million USD on water supply. The average amount of loan per SEs is estimated at 500,000 USD in electricity and 250,000 USD in water supply. The component 1 is managed by FTB with the support of the consulting firm Enclude. The components 2 and 3 are directly supervised by AFD and are implemented by the consortium GRET/ARTELIA/SEE-SAW/ISEA.