Microloans: Boon or bane for Cambodia’s rural poor?
All Ms Chhim Soy knew was that her brother needed a US$5,000 (S$6,700) loan to buy a motorcycle. The dutiful sister agreed to be his guarantor and when he went into hiding, the microfinance firm came knocking.
With her land title in hand, the 59-year-old noodle seller turned to her village’s informal lender in Cambodia’s Kampong Cham province to borrow money to repay the microfinance firm. But she couldn’t repay him either, so now her son has taken out a microloan to help her.
“We lived for many generations without microcredit and did all right,” she lamented by the wooden stilt house which no longer belongs to her. “Now, look at me.”
Microfinance evokes both wariness and optimism here in the Cambodian countryside, where low incomes and savings mean farmers often borrow small sums at high interest rates to fertilise their plots.
Photo courtesy of Chhor Sokunthea.