Challenges, Opportunities, and Policy Recommendations for Microfinance in Cambodia

Cambodia’s microfinance sector has played an important role in financial inclusion for the country’s low-income and rural populations. However, the sector now faces various challenges. One of these is the issue of multiple loans leading to borrower over-indebtedness. Furthermore, the rapid growth and commercialization of microfinance institutions (MFIs) have fueled concerns over mission drift. Other key challenges include limited financial literacy among borrowers, consumer protection gaps, market saturation and high levels of competition, and digital access gaps. Nevertheless, new opportunities are also emerging. The growth of digital finance and financial technology, better data integration and usage, and the potential of impact and responsible investment offer new directions for the sustainability of Cambodia’s microfinance sector. This chapter also presents policy recommendations to enhance the role of microfinance in improving people’s welfare and contributing to socio-economic development in Cambodia.