A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration, School of Management

Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 2001

Microfinance is nowadays seen as a priority tool in combating poverty. The microfinance providers are taking steps to significantly increase the supply of financial services for the poor. Access by the poor to microfinance and saving programs are crucial in alleviating Cambodia's extreme poverty and accelerating economic growth. PRASAC is one of microfinance provider in Cambodia. To assess the impact of this financial service provider by understanding the socio-economics and characteristics of its clients might be an important tool for improving its activities, end reach the low-income people. This study aims to gain a better understanding of the impact involves a review and assessment of the PRASAC credit program's activities including adherence to design, operation guideline and procedures which is currently implemented. The study is also an attempt to examine the long-term capacity to be self-sustained, and to explain the effects of the credit on it intended beneficiaries. An important finding is that the PRASAC credit program is not very effective, as it is not designed to facilitate credit for the poor. Instead, it is more beneficial to those who are slightly better off and have a small running business in which they can invest in a loan. However, the major impact of the program on loan provider has been to change attitudes towards occupational structure of its clients. Based on its Joan products, the interest rate is very high in compared with the neighbor countries such as Vietnam and Thailand. According to the overall finding of the study, it also indicated that in order to be successful into financially and institutionally sustainable PRASAC II should improve its loan products based on interest rate, term period and range to be more effective to the poor farmers. In terms of human resource training and development of management skills and management information systems are strongly recommended in order to consolidate and strengthen the existing activities to reach self-sustainability and to be benefited for the poor fa1mers in Cambodia.