The Cambodia Microfinance Association (CMA) said the sector is advancing towards sustainable development goals (SDGs), enhancing the country’s economic growth by enabling low-income households to obtain loans from microfinance institutions (MFIs). This, it said, has contributed to poverty alleviation, business growth and decent employment.

The assertion followed a study conducted by the association on the transformative effect of microfinance, carried out by Micro-Credit Ratings International Ltd (M-CRIL), an independent multi-national analytics firm. 

The study highlighted that the sector is a potent economic driver and a significant force in achieving SDGs. 

M-CRIL’s research delved into the sector’s impact on the country’s socio-economic landscape, showcasing its accomplishments, challenges and contributions to specific SDGs, as per a January 19 press release from the CMA.

In the press release, CMA chair Sok Voeun said the report reaffirmed the sector’s role in fostering economic empowerment and social advancement. 

“The microfinance sector’s … impact is not merely economic but also extends into the social fabric of Cambodia. As the CMA, we are committed to using these insights to continuously improve the sector’s positive influence on our society,” he said. 

On SDG 1 (No Poverty), the study revealed 58.6% of the sampled group had access to microfinance and 67% reported significant life improvements. The positive correlation suggests a considerable effect on poverty reduction, particularly among the poorest households.

In terms of SDG 2 (Zero Hunger), life improvements, particularly among the poor and vulnerable, have aided in achieving the goal, with only 0.8% of the sampled group experiencing temporary food shortages.

Regarding SDG 3 (Good Health and Well-being), the study showed that 67% of participants experienced life improvements, contributing to overall wellness. Despite existing challenges, it noted that the general trend is positive.

SDG 5 (Gender Equality) showed microfinance’s direct contribution to gender equality, with female borrowers comprising 46% compared to 41% of male borrowers. The report acknowledged challenges but emphasised the role and confidence of women in financial decision-making.

For SDG 8 (Decent Work and Economic Growth), both male and female respondents used loans for growing their micro and small businesses, aligning with the goal of economic growth.

SDG 10 (Reduced Inequalities) showed that 31% of microfinance clients who reported significant life improvements indicated a reduction in inequalities, directly linked to the zero-poverty objective of SDG 1.

SDGs 11 (Sustainable Cities and Communities) and 12 (Responsible Consumption and Production) highlighted micro-level policy impacts. It said that although these SDGs are more policy and action-oriented at the micro-level and not directly linked to microfinance services, the sector was recognised for promoting responsible financial practices and contributing to sustainable economic growth.

According to M-CRIL, the study’s key findings, based on an extensive impact assessment of over 3,200 microfinance clients from more than 450 villages across 10 provinces, revealed the sector’s varied impact on the lives of Cambodians.

The study found that two-thirds of the respondents reported improvements in their lives. 

Specifically, 31% experienced greater economic benefits and an enhanced quality of life, while another 36% reported some improvements over the past five years.