Lessons learnt from promoting sustainable and responsible finance in Cambodia

ADA has supported the development of the Cambodian microfinance sector since 2008 via a partnership with the Cambodian Microfinance Association (CMA). CMA is the national umbrella organisation of the microfinance sector in Cambodia.

Initially, the partnership with ADA aimed at rendering the association more professional, improving member services and strengthening communication and transparency. Once this institutional strengthening and capacity building had been completed in 2018, ADA and CMA decided to address a growing awareness of the risks associated with over-indebtedness of microfinance clients. From then onwards, the partnership focused on supporting the overall evolution of the Cambodian inclusive finance sector towards more responsible, transparent and client-centric practices.  

A national client protection framework

Under ADA’s guidance, this sectoral support was carried out by reaching out to actors who had the authority to influence national policies and enforce sectoral change. This new, cross-sectoral collaboration eventually resulted in the signing of a national client protection framework in 2020 which encompasses: 

• the Lending Guidelines and a code of conduct for the financial sector 
• compulsory training, certification and audit requirements for financial institutions
• educational material to improve financial literacy, client empowerment initiatives and complaint mechanisms for customers.

Part of the national financial inclusion strategy, this framework aims to strengthen consumer protection, promote sustainable economic growth, enhance financial stability and increase living standards in Cambodia. 

In the course of the partnership with ADA, CMA was transformed into a centre of excellence, a legitimate representative of the inclusive finance sector, a key contributor to nationwide frameworks for responsible and sustainable lending and client protection practices and an effective partner for implementing responsible inclusive finance projects.

After fifteen years of collaboration, CMA is now autonomous enough to pursue its institutional work without ADA’s support. To conclude the partnership, ADA summarised its impact on the development of the Cambodian microfinance sector as well as lessons learnt from 2008 to 2022 in a comprehensive document.
 

Read the document 

Outlook

CMA is currently striving to strengthen client protection and to address crucial issues such as aggressive sales practices, land expropriation and an ineffective collateral registry. This is done in close collaboration with national regulators and international development partners.