NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, August 8, 2019

By Shaun Turton and Bopha Phorn

Cambodia’s $8 billion microfinance industry, touted by Western aid groups and foreign investors as bringing financial opportunities to the country’s poor, is ensnaring families in crushing debt and could threaten the country’s economy, according to a damning report released Tuesday.

According to Cambodian rights groups Licadho and Sahmakum Teang Tnaut, reckless lending in the fast-growing sector — which counts 2.4 million Cambodians as clients — has led to coerced land sales, debt-driven migration, child labor and farmers eating less food.

The groups’ study, “Collateral Damage,” questions whether the industry’s reported nonperforming loan rate of 1.8% is kept low by such “human rights abuses” while highlighting the multimillion dollar returns made by microcredit institutions and their shareholders.