Cambodia: Providing technical assistance to the microfinance sector for the implementation of good lending practices

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femme, microfinance, cambodge
Proparco is financing Technical Assistance to develop and implement common lending guidelines for microfinance players in Cambodia to prevent the risk of over indebtedness. This financing is also supporting the implementation of a monitoring and accountability mechanism.
Client presentation

The Cambodia Microfinance Association (CMA) is a non-profit association set up in 2004, whose purpose is to represent the interests of microfinance institutions (MFIs) and offer them various services (training, technical assistance, networking, etc.) in order to ensure the prosperity and sustainability of the microfinance sector in Cambodia. It plays a crucial role in the development of a local and international network of MFIs, the search for equity and loans, the application of new technologies and the supervision of conflicts between microfinance operators. 

Project description

In 2016, faced with a rapid growth in loans, CMA alerted players in the banking and microfinance sector to signs of a credit boom and the risk of an overindebtedness crisis. CMA set up a special working group to draft a memorandum of understanding on the lending guidelines which will be adopted by all the members of CMA. The donors FMO, BIO, INCOFIN, ADA and Proparco have set up a joint Technical Assistance project to assist CMA with the definition of these lending guidelines and the implementation of a monitoring and accountability mechanism.  

Project impact

This project would appear to be the first attempt in the microfinance sector to develop detailed guidelines which aim to prevent the risk of overindebtedness by defining specific  terms for loans that are most likely to lead to this risk. The expected impacts are structural and could have an effect on the microfinance sector in the long term with a securing of loans. The adoption of these common guidelines and these indicators by all players in the microfinance sector would considerably strengthen the stability of the sector and thereby ensure its growth. 

Date of signature of the project
Financing tool
20 000 000 Euros
Amount of funding
EUR 20,000 for technical assistance
Financing details
Cambodia Microfinance Association