Cambodians Are Bingeing on Microfinance Loans

Source: The Economist

Bangladesh may be the homeland of microcredit, but no country is keener on it than Cambodia. According to its central bank, there were some 160,000 branches of microfinance institutions around the country in 2016—one for almost every square kilometre of Cambodian territory. Almost 2.2m of Cambodia’s 10m-odd adults have a microcredit loan outstanding, according to the Cambodian Microfinance Association (CMA), an industry group. The average debt is $3,320—roughly twice the country’s annual GDP per person. Credit is growing by 40 percent a year.

The microfinance boom has brought many benefits. An obvious one is a decline in the use of loan sharks. Between 2004 and 2017 the share of households borrowing from formal sources jumped from 8 to 30 percent while the proportion using informal moneylenders dropped from 32 percent to less than 6 percent, according to research published last year by the World Bank. 

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