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Asia-PacificJune 5 2005

Microcredit takes root in recovering system

Cambodia has made it through a tough time and come out the other side with a respectable degree of political stability – and microcredit lending, which provides much-needed loans to the poor, has emerged as a financial front-runner. Simon Montlake reports from Phnom Penh.
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Rebuilding a financial system after a major civil conflict is always a challenge for any country, although the case of Cambodia arguably deserves a special mention. During the 1975-79 reign of the extremist Khmer Rouge, not only was money abolished and the central bank dynamited, but also an entire generation of intellectuals and professionals were put to death.

After a decade of civil war and a UN-brokered peace accord in 1991, Cambodia has gradually regained a degree of political stability. A small private sector has grown from the ashes of communist rule alongside a massive international aid effort to raise living standards for its 13.4 million people. As a result, foreign investment has flowed into a few key sectors, notably tourism and garment manufacturing.

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