The National Bank of Cambodia (NBC) and the United Nations (UN) in Cambodia have outlined five key priorities to improve the microfinance sector following concerns over rising indebtedness.
A joint statement released on July 24th detailed the outcome of a multi-stakeholder consultation process initiated in November 2023 to address the rapid growth of the microfinance sector and its potential impacts. The process involved extensive dialogue with over 100 stakeholders including government agencies, financial institutions, civil society, and development partners.
Five key priorities were identified:
- Strengthening regulation and supervision: Implementing a code of conduct, enhancing inter-agency cooperation, and establishing effective self-regulation.
- Protecting borrowers: Improving complaint mechanisms, creating a debt counseling service, and enhancing financial literacy.
- Enhancing industry data and standards: Collecting and sharing data, developing loan restructuring regulations, and standardizing microloan definitions.
- Addressing informal lending: Enforcing regulations on informal lending and clarifying local authority roles.
- Promoting inclusive finance: Piloting agricultural insurance, supporting the formation of agricultural cooperatives, and focusing on indigenous communities.
The joint statement emphasized a commitment to creating a fairer and more transparent financial sector that serves the needs of all Cambodians. The consultation process is ongoing, with the next meeting scheduled for January 2025 to assess progress.