Cambodia Investment Review
The Cambodia Microfinance Association (CMA) has partnered with the National Bank of Cambodia (NBC) and the United Nations (UN) to enhance lending practices and protect borrowers amid ongoing concerns over financial risks and over-indebtedness in the microfinance sector.
Since 2024, NBC and the UN have been leading consultations aimed at addressing key challenges in Cambodia’s microfinance industry. The initiative, now actively underway, involves over 100 stakeholders, including government agencies, civil society organizations, financial institutions, and development partners, to ensure responsible lending and long-term sector sustainability.
Addressing Key Financial Risks
As a leading participant in the initiative, the CMA is working closely with national and international partners to promote responsible lending and safeguard vulnerable communities. Chairwoman of the CMA, Dith Nita, emphasized the association’s commitment to improving financial practices.
“We recognize the challenges borrowers face and are actively working to enhance lending practices and strengthen consumer protections. Our efforts aim to empower borrowers to make informed decisions while safeguarding their rights,” she said.
Among the key measures being implemented, the CMA, in collaboration with NBC and the UN, is supporting reforms to ensure that loans are granted based on a borrower’s ability to repay rather than relying solely on collateral. A crucial policy change includes the prohibition of Indigenous Communal Land Titles (ICLTs) as collateral, helping to protect indigenous communities from potential land loss.
Strengthening Financial Literacy and Consumer Protections
The CMA is also supporting the expansion of the Financial Consumer Centre under the Association of Banks in Cambodia (ABC). The center provides borrowers with access to dispute resolution services and offers stronger consumer protections.
Additionally, the CMA is advancing financial literacy initiatives through the Safe Community Finance Project, focusing on empowering rural communities and women. By improving financial education, the association aims to reduce over-indebtedness and help borrowers make informed financial decisions.
“Together with our partners, we are working to build a financial sector that is inclusive and offers meaningful opportunities for Cambodia’s most vulnerable populations,” Dith Nita added. “Our goal is to equip borrowers with the tools needed to succeed financially while protecting them from financial risks.”
Aligning with Sustainable Development Goals
The initiative aligns with the United Nations Sustainable Development Goals (SDGs), particularly in the areas of poverty reduction, gender equality, and financial inclusion. By strengthening financial sector policies and borrower protections, stakeholders aim to ensure that microfinance remains a driver of economic growth and opportunity in Cambodia.
As the consultation progresses, the CMA is calling on investors, policymakers, regulators, and financial institutions to collaborate in shaping a more responsible microfinance sector. Through collective action, the association hopes to reinforce safeguards for borrowers while maintaining microfinance as a key economic tool for Cambodians.
