Country Level Effectiveness and Accountability Review (CLEAR): Cambodia

This paper discusses the Country-level Effectiveness and Accountability Review (CLEAR) that took place in Cambodia to analyze donor effectiveness in supporting microfinance. The paper discusses:

• The background of microfinance in Cambodia, and the present situation;
• GAP analysis of the Cambodian microfinance industry;
• Donor effectiveness: Strengths and weaknesses.

The study concludes that donors have achieved considerable success in building commercially oriented microfinance in Cambodia. It states that the donor success can be attributed to:

• Sustained deployment of skilled technical expertise;
• Performance based contracts;
• Effective support to the Cambodian Government in building a regulatory and supervisory framework;
• The ability to alter funding strategies according to industry needs.

The study recommends that donors should-

At the micro level:

• Leave capital funding to private investors and concentrate on providing technical assistance to existing promising institutions;
• Support new product development and innovations by strong existing institutions.

At the meso level:

• Support a commercially based wholesale capital market for microfinance;
• Develop local technical expertise;
• Facilitate the exchange of debtor information among MFIs.

At the macro level:

• Provide sustained technical assistance to the National Bank of Cambodia;
• Support the development of a national payment infrastructure;
• Work with the government to develop a legal status for profit-making NGOs.

The donors should also:

• Improve their internal effectiveness;
• Use accepted principles for micro funding;
• Invest in staff training;
• Maintain performance based management.