The Development of Microfinance in Cambodia

This article makes an assessment of the microfinance system in Cambodia and the key issues affecting it. It also recommends policy changes to improve the system. The paper informs about:

• Genesis and development of microfinance in Cambodia;
• Various players in the microfinance market and their operations;
• Policy and regulatory environment governing the microfinance sector in the country;
• Sector status - supply and demand of microcredit.

Further, the article mentions that:

• More credit could be provided if commercial banks expand their services to rural areas;
• MFIs have three options in financing additional credit:
  • The savings of depositors, or/and;
  • Borrowing from other institutions, or/and;
  • Extra capital from shareholders and donors.

Finally, the paper makes policy recommendations for improving the microfinance system in Cambodia:

• Holding regular and open discussions between banks, MFIs and representatives from borrowers;
• Credit institutions ensuring that they charge minimum interest rates;
• Targeting people with no access to credit from commercial banks or whose small business applications have been rejected;
• Raising import duties on goods that compete with microenterprise products;
• Introducing favorable policy and regulatory changes;
• Improving the infrastructure;
• Introducing administrative reforms;
• Building the capacity of the poor through training and education.