geo/myanmar
SME Finance Forum member CDC, the UK’s development finance institution, has today announced its investment in Frontiir, the leading internet service provider in Myanmar. The investment will help fund Frontiir’s ambitious expansion throughout Myanmar, connecting over 2 million people to the internet.
Since 2011, Myanmar has been on a path of transition from military rule and a state-controlled economy, towards democracy and a market-based economy whilst also managing the challenge of wealth creation. These transitions are taking place in a context of religious and ethnic diversity – the Burmese majority accounting for two-thirds of the population.
SME Finance Forum member OPIC has provided a $5 million loan to BRAC Myanmar Microfinance Company Limited, also a member, to support lending to poor and underserved borrowers.
“One of the most effective ways to empower the people of Myanmar is to help them access financial services so they can start and grow businesses, increase their earnings and invest in their families,” said David Bohigian, OPIC Acting President and CEO. “OPIC’s loan to BRAC will support thousands of loans to women and other groups who are not served by mainstream financial institutions.”
Member OPIC continues to make an impact in closing the SME finance Gap where it's needed most. In this letter to the editor for Myanmar Times, Scot Marciel, U.S. ambassador to Myanmar speaks on how OPIC continues to invest in Myanmar. Marciel says, "Two years ago OPIC committed financing to its first microfinance project in Myanmar, to help entrepreneurs and small business owners obtain loans to start and grow businesses. Despite Myanmar’s strong recent growth, the portion of adults who have access to financial services remains among the lowest in the region.
Myanma Economic Bank (MEB) will provide funds to SMEs in the the manufacturing, production and trading, import substitution, recycling and energy saving and services sectors.
MEB has a two-step loan with an interest rate of nine percent, a part of their SME loan program.
Borrowers able to utilize property as collateral will be able to access K300 million. Variations of loan terms include:
Zaw Lin Aung, managing director of KBZ Bank, the largest private bank in Myanmar with the largest retail network, said the bank had changed its lending policy to help the growth of SMEs across the nation. He said less reliance on collateral led the bank to knowing more about customers, understanding their business plans, knowing their financial conditions, and identifying sources of repayment.
KBZ Bank or Kanbawza Bank has more than 470 branches throughout Myanmar, with plans to grow its division devoted to SMEs. Running for a year, the new initiative uses credit guarantee insurance to attract borrowers, offers client banking training and has improved its IT operations to better serve SMEs.
SME Finance Forum Member Fern Software, is serving a new client. Abacus core banking system which is provided by Fern, has signed with Ruby Hill Microfinance, a new microfinance entity in Myanmar. Ruby Hill was established earlier this year as a joint venture between Myanmar’s Loi Hein Group and Dragon Capital Group, a Vietnam-based asset manager.
As emerging markets go, Myanmar is in a unique position. Just five years ago, a civilian government came to power, with the shift swiftly opening the country up to global markets and trade. This in turn presented a series of diverse challenges for the financial sector – the most pressing of which is to rapidly modernise in order to meet the needs of Myanmar’s people.
