#United Nations #Cambodia #Cambodia Microfinance Association #National Bank of Cambodia #Phnom Penh

Strengthening Microfinance Practices in Cambodia

The collaboration between the Cambodia Microfinance Association (CMA), the National Bank of Cambodia (NBC), and the United Nations (UN) marks a pivotal shift in the microfinance sector in Cambodia. Initiated in 2024, this partnership aims to tackle pressing issues such as borrower over-indebtedness, land-related financial risks, and the need for improved consumer protection. The transformation is crucial for enhancing the sustainability of the sector and protecting vulnerable populations.

Background of the Initiative

Since the launch of consultations in 2024, numerous stakeholders involved in governance, civil society, and financial institutions, as well as development partners, have rallied together. Their collective efforts have entered the active phase, focusing on refining lending practices and securing the future success of microfinance in Cambodia. Dith Nita, the Chair of CMA, emphasized their commitment to working alongside national and international partners to safeguard at-risk communities and uphold the significance of microfinance as a tool for economic empowerment.

"The CMA is determined to ensure that microfinance benefits the needy in Cambodia. We are actively addressing the challenges borrowers face while fostering improved lending practices and consumer protection standards," said Dith Nita.

Key Actions and Reforms

The CMA addresses several critical areas, including the enhancement of lending standards. With guidance from the ABC and support from the UN, CMA advocates for reforms that create a lending environment focused on the borrower's repayment capacity, rather than merely collateral. One of the notable measures includes a ban on the use of indigenous communal land titles (ICLTs) as collateral. This step is aimed at protecting vulnerable communities from the threat of land loss, a prominent concern amongst borrowers.

In addition, the CMA supports the development of the Financial Consumer Centre operated by the Association of Banks in Cambodia (ABC). This center will offer borrowers access to dispute resolution services and enhanced protective measures. Furthermore, the CMA promotes financial literacy programs targeting women and rural communities. These initiatives are part of the Safe Community Finance Project aimed at empowering borrowers to make informed financial decisions and reduce the risks of over-indebtedness.

"Together with our partners, we are building a financial sector that is inclusive and offers meaningful opportunities to the most vulnerable populations in Cambodia. Our goal is to equip borrowers with the necessary tools for their financial success while shielding them from financial risks," Dith Nita added.

Aligning with Sustainable Development Goals

These collaborative efforts align with the UN's Sustainable Development Goals (SDGs), particularly concerning poverty alleviation, gender equality, and financial inclusion. They play a vital role in shaping the Cambodian microfinance sector into a robust engine for economic growth and opportunity.

As consultations progress, the CMA invites all relevant parties—investors, policymakers, regulatory bodies, civil society, financial institutions, and development partners—to join in shaping the future of Cambodia’s microfinance sector. By working together, we can ensure that at-risk populations are protected, and microfinance continues to provide economic opportunities to all Cambodians.

About the Cambodia Microfinance Association

The Cambodia Microfinance Association (CMA) is a professional organization committed to promoting responsible and sustainable microfinance practices across Cambodia. By collaborating with financial institutions and stakeholders, the CMA advocates for protecting borrowers' rights and fostering an inclusive financial sector that benefits communities nationwide.