Like many in the inclusive finance sector, e-MFP has been following with deep concern the developments – and the headlines – from the microfinance sector in Cambodia. The most recent article in the Guardian, by Jack Brook, has added yet another dimension to an already complex situation.
We believe strongly in the value of financial inclusion. It is a path that can enable poor households to access opportunities that wealthier ones take for granted: to grow a business, build a home, send a child to school or university, or simply manage their day-to-day household finances more easily. But we are deeply aware that credit poses risks – having too much debt is worse than not being able to borrow at all.
Our MIMOSA (Microfinance Index of Market Outreach and Saturation) initiative seeks to provide a clearer picture of credit – and especially microcredit – use in a market and highlight when those markets veer into oversaturation and risk of overindebtedness. Since 2015, the project has been publishing warnings of dangerous credit growth in Cambodia, and in 2020, it gave Cambodia its highest possible risk score. This project has played an important role in raising warning flags and encouraging sector stakeholders to take steps to address the evolving situation.
In 2021, e-MFP lent its support to the Cambodia Microfinance Association’s Lender Guidelines initiative, with the goal of reducing lending practices that pose a high risk of over-indebting vulnerable clients. Doing this allowed us to contribute to the work of several of our members and their Cambodian partners, who jump-started and supported this initiative over the years.
Most importantly, e-MFP continues to fulfil its core role as a diverse network of sector actors to convene all relevant stakeholders – investors, experts, and of course, financial institutions and regulators from Cambodia – in open, honest discussions meant to help the sector find the path to a more sustainable future. This involves minimising the possibility of clients borrowing too much and ensuring that those clients who – for whatever reason – find themselves with unmanageable debt are given options that allow them to settle their commitments with dignity.
We welcome the important leadership role played on this topic by our member and close partner SPTF+CERISE, and we will continue to support the sector and work with our members and partners to help find a way forward.
Like many in the inclusive finance sector, e-MFP has been following with deep concern the developments – and the headlines – from the microfinance sector in Cambodia. The most recent article in the Guardian, by Jack Brook, has added yet another dimension to an already complex situation.
We believe strongly in the value of financial inclusion. It is a path that can enable poor households to access opportunities that wealthier ones take for granted: to grow a business, build a home, send a child to school or university, or simply manage their day-to-day household finances more easily. But we are deeply aware that credit poses risks – having too much debt is worse than not being able to borrow at all.
Our MIMOSA (Microfinance Index of Market Outreach and Saturation) initiative seeks to provide a clearer picture of credit – and especially microcredit – use in a market and highlight when those markets veer into oversaturation and risk of overindebtedness. Since 2015, the project has been publishing warnings of dangerous credit growth in Cambodia, and in 2020, it gave Cambodia its highest possible risk score. This project has played an important role in raising warning flags and encouraging sector stakeholders to take steps to address the evolving situation.
In 2021, e-MFP lent its support to the Cambodia Microfinance Association’s Lender Guidelines initiative, with the goal of reducing lending practices that pose a high risk of over-indebting vulnerable clients. Doing this allowed us to contribute to the work of several of our members and their Cambodian partners, who jump-started and supported this initiative over the years.
Most importantly, e-MFP continues to fulfil its core role as a diverse network of sector actors to convene all relevant stakeholders – investors, experts, and of course, financial institutions and regulators from Cambodia – in open, honest discussions meant to help the sector find the path to a more sustainable future. This involves minimising the possibility of clients borrowing too much and ensuring that those clients who – for whatever reason – find themselves with unmanageable debt are given options that allow them to settle their commitments with dignity.
We welcome the important leadership role played on this topic by our member and close partner SPTF+CERISE, and we will continue to support the sector and work with our members and partners to help find a way forward.
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