Digital incubation brings opportunities to women-owned micro, small and medium-sized enterprises (MSMEs) in Cambodia
March 8, 2023
Micro, small and medium-sized enterprises (MSMEs) constitute the backbone of Cambodia's economy and account for 99.8 percent of its businesses. MSMEs provide 58 percent of GDP and 70 percent of total employment¹. 61 percent of these MSMEs are owned by women². Many of them fall within the informal economy with low-tech – characterizations which have made them particularly vulnerable to the challenges of the pandemic.
Cambodia’s economy faced a significant loss in economic growth of -3.1% in 2020, predominantly impacting its garment, tourism and construction sectors³. These shocks led to spillover effects on domestic demand and supply. Cambodia’s local markets have traditionally been the epicentres of trade activity across the country. The onset of the COVID-19 pandemic, however, drastically changed this landscape for many MSMEs that rely on physical markets. With strict COVID-19 restrictions imposed, limiting the ability for physical markets, numerous MSMEs faced an existential threat to their survival. They faced decreased demand due to the lack of digital services and limited cash flow.
As part of its wider COVID-19 response, United Nations Development Programme (UNDP) recognized the need to support Cambodian MSMEs to transition their businesses online for increasing their ability to survive and their resilience to future shocks.
Chran Ponny was one of impacted business owners. Ponny is the Chief Executive Director of Seasonfresh (Cambodia) Co., Ltd., a company that sells fresh and dried mango and longan fruit in local and international markets. With 13 permanent staff and 200 workers, her business operated offline before the COVID-19 pandemic.
As restrictions threatened her supply chain, Ponny began looking towards other available options for business continuity and survival, including online sale. However, this was a new area for Ponny, who did not have the basic needed skills to shift her business to digital.
The call for application launched by UNDP to join the “MSME Incubation Programme on Digitalization” proved timely for her. This initiative, implemented by the Young Entrepreneur Association of Cambodia (YEAC) and UNDP aims to support businesses to gain digital skills to shift their businesses online and to increase export capabilities. Funding was secured from UNDP COVID-19 Rapid Financing Facility, the Enhanced Integrated Framework (EIF), the Ministry of Commerce and Khmer Enterprise. It also supported the national programme for e-commerce acceleration “GO4eCAM”.
Having successfully passed the selection process, Ponny joined the four-month long programme. Together with her cohort, she took part in seven training modules to build critical skills. The modules covered digital communication and marketing, financial literacy and accounting software, domestic and cross-border e-commerce, and the basics of export. Access to direct mentorship and networking events was also provided.
With the digital skills gained through training and mentorship, Ponny was able to start transforming her business. She started by updating her business Facebook page to include digital marketing, which resulted in an impressive 300% increase in reach. By growing her customer base, Ponny expects to increase her exports to China by 50-60 percent in March and April of 2022. To do this, she needed to double the number of contracted workers from 200 to 400, thus bolstering local job creation in the communities where her business value chain operates.
The incubation programme has also promoted networking by creating a business community for women entrepreneurs like Ponny. She is now working with other members of her cohort to expand their network for future cooperation and growing their businesses together.
To date, a total of 101 MSMEs, including 39 women-owned enterprises like Ponny’s, have participated in the “MSME Incubation Programme on Digitalization”. The project is laying foundations for MSMEs to embrace digital transformation, gain access to finance for e-commerce and support for business formalization that would enhance their export readiness. As a result, 1,189 Cambodian MSMEs (45.5% of them owned by women) shifted their businesses to online platforms
“This is a great intervention for MSMEs in Cambodia to sustain their businesses and maintain their staff during this difficult time,” said Ponny. “It is contributing a lot to social improvement through job retention. I think if my company keeps improving, more investment will come."
Despite the easing of COVID-19 restrictions and the resumption of physical markets, digital transformation will continue to play an increasingly important role in an inclusive and sustained economic recovery in the country. It will particularly improve social and economic outcomes for women, provided the gender digital divide is addressed, as digital transformation enhances women economic inclusion and is adaptable to women’s other unpaid contributions, such as family and other care responsibilities.
UNDP is committed to working closely with national partners and across the UN system to support women economic empowerment and financial inclusion since they are essential prerequisites for achieving the Sustainable Development Goals (SDGs) and national sustainable development. We are also expanding collaboration with the private sector, which is a critical partner in advancing gender equality and women empowerment.
Young Entrepreneur Association of Cambodia (YEAC) and United Nations Development Programme (UNDP)
¹ Ministry of Industry, Science, Technology and Innovation. 2018. Policy Brief: Challenges of Women-owned SMEs in Getting Bank Loans. Ministry of Industry, Science, Technology and Innovation: Cambodia.
² International Finance Corporation. 2019. Exploring the Opportunities for Women-owned SMEs in Cambodia. International Finance Corporation, Washington, DC.
³ United Nations Development Programme. 2021. Projected Impacts of COVID-19 on the 2020 Human Development Index in Cambodia and its Neighbors. United Nations Development Programme: Cambodia.