Digitalization Key for Women SMEs to Thrive

Women-led SMEs in Cambodia face major hurdles, including access to finance and limited financial literacy - factors that can be overcome by digitalization and introducing alternative financing models, a study reveals.
Pepper on sales in a market in Phnom Penh. Kiripost/Siv Channa
Pepper on sales in a market in Phnom Penh. Kiripost/Siv Channa

Key issues facing Cambodia’s small and medium-sized enterprises (SMEs) among women are access to finance and limited financial literacy. However, through alternative financing models, digitalization can expand WSMEs’ financing options, reveals a new study by Woomentum, a Singapore-based organization that supports women leaders and women in business.

With local think tank Asian Vision Institute (AVI), Woomentum has kicked off a training program on Women's Digital Entrepreneurship (WDE) to equip Cambodian women with practical skills to harness digital technology for business development.

WDE’s 50 participants hail from a diverse pool of Cambodian female business owners and entrepreneurs from SMEs for the program, which runs for two consecutive days every month. From August to January 2023, Khmer Enterprise (KE) and Satapana Bank (SPNB) jointly support the six-month training.

Touch Socheata, South East Asia director of Woomentum, told Kiripost that WDE training will "build social capacity by promoting a trust-based community of women business owners." She added that we want to "inspire women business owners with vision and purpose."

“[SPNB] is pleased to be in partnership with AVI and KE to support Cambodian women and address the challenges they have to face by equipping them with digital and entrepreneurial literacy,” said Jennifer Lee, Chief Transformation Officer at SPNB, in a release.

Women's Digital Entrepreneurship (WDE) Training Program (Photo: Supplied)
Women's Digital Entrepreneurship (WDE) Training Program (Photo: Supplied)

Chem Siriwat, Programme Director of WDE and Director of AVI’s Centre for Inclusive Digital Economy (CIDE), said, “We were fortunate to meet SPNB, who has agreed to support us, given us good ideas, and even provided us with the venue as well as experienced trainers.”

“[It] is a continuation of our mutual values in enhancing Cambodia's entrepreneurial ecosystem and the development of business skills among women,” added Sunsey Sereivoreaktep of KE, the arm of the Ministry of Economy and Finance (MEF) that provides financial and non-financial support to startups and SMEs in Cambodia.

SME financing gap in Cambodia

The study by KAS Japan and Woomentum showed that the SME financing gap for women-owned SMEs in Cambodia is approximately $2.2 billion.

“By allowing the entrance of fin-tech firms, tech companies, and mobile network providers, alternative financing solutions also create a more inclusive environment for WSMEs seeking funding,” wrote Rabea Brauer and Cristita Marie Perez, of Konrad-Adenauer-Stiftung (KAS) Japan, in ‘Access to financing through digitalization: New opportunities for women-owned SMEs’.

The 2022 publication takes a close look at Cambodia, Indonesia, Malaysia, Myanmar, Singapore, South Korea, and Vietnam.

Increased access to finance has been linked with growth, income smoothing, and poverty reduction. Access to a range of cost‐effective financial services will enable low‐income individuals to better manage their financial lives while creating positive economic impacts, according to Cambodia’s National Financial Inclusion Strategy (NFIS) 2019-2025.

The NFIS also aims to increase access to quality official financial services, reduce the rate of unbanked women by half, from 27 per cent to 13 per cent, and expand the use of official financial services from 59 per cent to 70 per cent by 2025.

The NFIS also shows the financial literacy rate of 18 percent, ranked 135th out of 144 countries, “indicating that a large share of the population in the country has very limited knowledge and ability to engage with formal financing services”.

The report by KAS Japan and Woomentum concluded that, “It is necessary to nurture collaboration between the Royal Government of Cambodia sectoral programs and the private sector including local financial service providers to increase WSME financial literacy.”

Despite the high self-employment rate, Oxfam said women-owned businesses lag behind male-owned enterprises in terms of size and productivity. They tend to be less profitable and more vulnerable to economic shocks.

Cambodia is no exception to the regional trend, Oxfam says, as women earn less than men, tend to predominantly find employment in precarious and under-valued jobs, and struggle to reconcile family obligations with their businesses and work outside the family.

As a result of the gendered social norms, women in Cambodia perform an average of 188 minutes of caring and household services per day compared to 18 minutes for men. Unpaid Care and Domestic Work (UCDW) limits the time women have to build skills, Oxfam said.

“A large proportion of women are driven to entrepreneurship due to the lack of formal employment opportunities, and thus, self-employment is seen as the primary income generation source and a way of allowing them to balance their time with the care and family responsibilities,” Oxfam noted in its paper, ahead of a national forum on advancing women entrepreneurship this week.

While home-based entrepreneurship affords women valued flexibility, this benefit is only a product of underlying gender inequality and women’s high domestic care burden, Oxfam said.

“Urgent interventions are needed to enable women to pursue opportunity-based entrepreneurship in ventures with greater growth potential on par with their male counterparts.”