Strengthening Microfinance in Cambodia: A Partnership for Change

In an effort to improve lending practices and protect borrowers, the National Bank of Cambodia (NBC) and the United Nations (UN) have launched a transformative initiative in the microfinance sector. This initiative, which began in 2024, has brought together over a hundred stakeholders—including government agencies, civil society, financial institutions, and development partners—to address critical issues impacting Cambodian borrowers, such as over-indebtedness and land-related financial risks.

The Cambodia Microfinance Association (CMA) plays a pivotal role in this effort. As articulated by its Chairwoman Dith Nita, the CMA is dedicated to safeguarding vulnerable populations and ensuring that microfinance remains a viable tool for economic empowerment. "We recognize the challenges borrowers face and are actively working to improve lending practices and strengthen consumer protections," she stated during a recent consultation. This initiative emphasizes empowering borrowers to make informed decisions while ensuring their rights are protected.

A crucial aspect of this collaboration is the establishment of enhanced lending standards. With the support of the NBC and the UN, the CMA is pushing for reforms that prioritize a borrower’s ability to repay over traditional reliance on collateral. A significant change involves the prohibition of using Indigenous Communal Land Titles (ICLTs) as collateral. This measure is designed to protect vulnerable communities from the devastating risks associated with losing their land.

In parallel, the CMA is advocating for the expansion of the Financial Consumer Centre under the Association of Banks in Cambodia (ABC). This center will offer borrowers access to dispute resolution services and better protections, addressing the need for greater resources and support for those in need. Moreover, the CMA has launched financial literacy programs tailored for women and rural communities through the Safe Community Finance Project. These programs aim to equip borrowers with the knowledge necessary to make sound financial decisions and reduce the likelihood of over-indebtedness.

"Together with our partners, we are striving to build a financial sector that is inclusive and provides meaningful opportunities for Cambodia’s most vulnerable populations," Dith Nita emphasized. The initiative resonates strongly with the United Nations Sustainable Development Goals (SDGs), particularly in combating poverty, achieving gender equality, and enhancing financial inclusion, highlighting the essential role that microfinance can play in driving economic growth and opportunity in the nation.

As this initiative progresses, the CMA is calling on all stakeholders—ranging from investors and policymakers to regulators and civil society—to join forces in reforming Cambodia's microfinance landscape. Collective action is crucial to ensure that the sector continues to serve its purpose of empowering all Cambodians and protecting vulnerable populations.

The Role of the Cambodia Microfinance Association

The Cambodia Microfinance Association (CMA) is a professional body committed to advancing responsible and sustainable microfinance practices throughout Cambodia. This organization collaborates closely with various financial institutions and stakeholders to safeguard borrower rights and promote an inclusive financial environment that benefits local communities nationwide. Through initiatives like these, the CMA strives to ensure that microfinance continues to be a significant driver of economic opportunity for all Cambodians.