Making a mark in the microfinance fray

SONATRA Microfinance Institution is a new entrant into Cambodia’s very competitive MFI sector. Director Sorn Sokna spoke with The Post’s May Kunmakara about the challenges his company faces as it tries to carve out a niche for itself in that space, as well as the opportunities he sees going forward. 

Sorn Sokna, director of Sonatra Microfinance Institution, speaks to reporters at the company’s office in Phnom Penh on Friday. Photo by: Hong Menea

Tell me the history of Sonatra and why you decided to launch this business? 
Sonatra was licensed by the National Bank of Cambodia in January as part of joint venture with a Japanese investor. But they hold only a small portion of shares, 15 percent. We’re majority local-owned.

In addition, with the cooperation of our Japanese shareholder we received additional loans of around US$50 million from both Japan and Singapore so as to increase our loan capacity. We want to be a strong microfinance institution in Cambodia.

We’re well aware that many small and medium-sized enterprises are facing a fund shortage. I think we can help them to improve their businesses, as well as farmers. In fact, I think our MFI provides much easier access to loans than banks.

What sectors do you focus on? Who are your target clients?
Of course, we don’t focus on any specific sectors. Economic circumstances will dictate which customers seek out loans, though we do tend to serve farmers and SMEs.

How has Sonatra taken shape since you began operations? 
We see huge demand for loans from farmers and SMEs as our economy continues to get better. We want to offer even more loans to them, but we are still at the initial stages of our development. Still, we plan to take advantage of the growing market by increasingly extending loans to entrepreneurs who are willing to improve their businesses.

What is the competition in the industry like at the moment? 
There’s a lot of tough competition right now given the number of players in the industry, especially those with many years of experience. However, I do hope that what we can do now is strengthen our capacity and clients’ confident in our services. We think we can do that. We see our business as being on a very good track.

What is Sonatra’s strategy to attract customers given the tough industry competition?
We’re still quite new in the industry, so we have not done to much promote our business since getting licensed. However, we think going forward that we’re ready to compete with the more experience MFIs. We will offer customers lower interest rates than our competitors. And we plan to capitalise on the huge loan-growth demand we’re seeing in the agricultural sector. We have a partner in pharmaceutical industry as well.

So we will loan to customers who want to buy medicine or seek treatment at medical clinics. Also, we will give students who are unable to pay for school a chance to pursue their studies by offering loans for them to attend the Financial Institute of Cambodia.

How does the average Cambodian view the idea of taking and paying back loans? 
I think people clearly understand the process. That’s especially true compared to years ago when a lot of MFIs struggled with a general lack of knowledge about how loans worked. Now people are taking these loans to help grow their businesses, and they will repay the loans in full.

What are the opportunities and challenges facing MFIs right now? 
The recovering economy gives us lots of opportunities to grow in the industry because there are many new businesses being started. They need more and more money to better their operations, especially in the agriculture sector. 

However, there are challenges, too. We really don’t know if our customers put the money we loan them to good use. So Sonatra now offers a service to help these companies come up with business plans that allow them to get the most effective and efficient outcome from the loans they take.