Financial Inclusion for Cambodians - A Step Ahead

Updated On : Oct 2022

Over the past two decades, Cambodia has been the sixth fastest‐growing economy in the world, with financial inclusion playing a crucial role in poverty reduction in Cambodia. With poverty declining at an average of over 1% per annum, Cambodia is ranked fourth in the world in successful poverty reduction, which is one of the key Millennium Development Goals of the United Nations. This has led to Cambodia’s financial sector growing rapidly and providing opportunities to people in the rural area and to those with low income.

Financial inclusion is the tool to address a country’s economic growth, reduce inequality, and decrease the overall national poverty rates. In the year 2015, the Royal Government of Cambodia, helped by UNCDF, prepared a Financial Inclusion Road Map and Action Plan, which was aimed at increasing access to quality formal financial services. This is also intended to reduce the financial exclusion of women by 50%, diversify the usage of formal financial services by 2025, improve household welfare and support economic growth. The plan required a MAP study on Cambodia.

A 2017 MAP Diagnostic report looked into the demand for and supply of financial services, and the regulation of these services in Cambodia. The report emphasized measures that would best meet national objectives for growth and improved livelihoods. It then provided a roadmap to define, prioritize, coordinate and track these measures while also identifying recommendations for greater financial inclusion.

Recognizing the role of the financial sector in promoting economic growth, the Royal Government of Cambodia outlined its objective of enhancing financial inclusion under the Financial Sector Development Strategy (2016‐2025).

Cambodia has been successful in enhancing socio-economic capital growth and reducing poverty through financial inclusion. The country has made efforts to promote financial inclusion through countrywide and market‐oriented financial sector development, enhancement of financial literacy, reasonable reduction of cost in using financial services, and enabling financial infrastructure development for more convenient and more efficient access to finance.

Cambodia is bringing in financial inclusion through various ways such as encouraging savings in formal financial institutions, enabling the unserved population or SMEs to access affordable financial services, promoting innovative credit products for SMEs and MSMEs, enabling the expansion of payment system capabilities, prioritizing the development of a well-functioning insurance market strengthening the capacity of financial sector regulators, and increasing consumer empowerment and sector transparency.

In 2022, three associations -, the Association of Banks in Cambodia (ABC), Cambodia Microfinance Association (CMA), and Cambodian Association of Finance and Technology (CAFT), teamed up to promote financial inclusion through innovative technological solutions, capacity building, and a flourishing fintech ecosystem for the benefit of the industry and Cambodians.

A memorandum of understanding was signed on September 19, 2022, by the chairmen of the three associations - Raymond Sia (ABC), Sok Voeun (CMA), and Pell Remi Sisophon (CAFT). The deal is aimed at building a strategic partnership between the three institutions to further develop the fintech framework.

Features of the MoU

  • The MoU has three primary cooperative objectives.
    • To serve as industry partners for the Cambodian fintech and start-up community
    • To execute and monitor the implementation of the Banking and Financial Institutions’ Code of Conduct (BFI CoC)
    • To collaborate on the adoption of fintech activities and capacity building
  • Digitalisation, innovation, and technology are centred around customers, and with financial services being a primary need, it is crucial to strengthen the systems in order to ensure that financial services reach all Cambodian citizens for the success and sustainability of the sector and the economy.
  • The signing of the MoU symbolised the commitment and joint efforts of the associations to promote the development of the fintech framework and to achieve the goals of digital adoption and digital transformation of the country.
  • The MoU intends to foster meaningful technological development in the banking and financial industry while offering new opportunities for Cambodians to understand these new technologies, especially those who own businesses, ensuring their transactions are more efficient, convenient, and faster.
  • The MoU signifies the spirit of collaboration for the associations to join hands firmly and address the sectoral issues by bringing awareness, education, and innovation to solve some of the challenges faced.
  • The MoU would supplement the central bank’s efforts in promoting financial inclusion through the advancement of technology and innovation.

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