Cambodia Revenue Finance Facility
Access to finance | Enterprises in safe water
In 2018 the Foundation began exploring new ways of supporting the piped water sector in Cambodia. This sector is unique in having a thriving private sector providing piped water in areas outside the reach of utilities: there are currently close to 300 licensed private water operators in Cambodia, and another 100 or so unlicensed operators.
However for many operators, the network covers only around 60% of their licensed area and does not reach poorer, less dense areas; and accessing the necessary finance to expand the network can be challenging.
The Foundation is now partnering with GRET/iSEA – a French NGO and its consulting arm, that have significant experience working with the small piped water operators in Cambodia – and the Bank for Investment and Development of Cambodia (BIDC) – to provide a package of innovative finance for private water operators with wrap-around support, to encourage them to expand networks to cover 100% of accessible households.
The package of support is comprised of:
1. Revenue finance to support capex investments and connections
A loan is provided to the operator and is repaid to the bank as a percentage of water sales. The goal is to achieve a multiple of the principle sum provided, rather than using a standard fixed interest rate. This makes the finance flexible, as the real value of repayments rises and falls with revenues – which is critical given the highly seasonal nature of operations.
In addition to investment finance, the Foundation is also facilitating working capital loans to operators to support the growth of household connections, as the upfront connection fee can be a barrier to a household connecting.
2. Broader package of business support
The Foundation’s package of support also includes support in four key business areas:
- Technical drawings and feasibility studies
- Financial modelling and systems
- Sales and marketing
- Development of new products e.g. internal plumbing
This has been tested and refined over the last 12 months, and ten operators have now accessed finance from BIDC. With support from its partners, the Foundation is now scaling up the initiative, while ensuring continuous coordination with other existing finance and players in the sector.