Reforming Microfinance in Cambodia: Towards Sustainable Poverty Alleviation in the Post-COVID Era

<p>Cambodia experienced robust economic growth in the 2010s, but the COVID-19 pandemic caused a significant economic contraction in 2020. Despite a strong vaccination campaign and subsequent economic recovery, poverty remains a critical issue, with a significant portion of the population living in or vulnerable to poverty. Microfinance has been promoted as a key tool for poverty alleviation; however, Cambodia’s microfinance sector faces challenges such as high interest rates, collateral requirements, and over-indebtedness among borrowers. This paper explores the history and current state of microfinance in Cambodia, highlighting the discrepancies between its implementation and the original principles of microfinance as envisioned by Muhammad Yunus. It calls for reforms to lower interest rates, adopt more humane debt collection practices, and integrate microfinance with social security systems to better support those in need. These measures are essential to ensure that microfinance can effectively contribute to poverty reduction and sustainable economic growth in Cambodia.</p> <p> </p>