It’s time to fix Cambodia’s broken microfinance system

Microfinance is supposed to relieve poverty, but with investors now profiting from land loss, somewhere along the way things went wrong.

A recent Thomson Reuters Foundation report about an ongoing debt crisis in Cambodia laid bare a truth that many of us who work to defend land, labour and human rights in Cambodia have known for a while now: Cambodia’s microfinance sector is broken.

The banks and microfinance institutions that have provided 2.6 million microloans to Cambodian borrowers claim they are lifting people out of poverty. But too many of the farmers, migrant labourers and factory workers who we work with share stories of how their microloans lead them into debt traps, dangerous migration, and landlessness.

We know this may come as a surprise. Microfinance is supposed to relieve poverty by providing poor borrowers access to capital to start business and increase incomes. And Cambodia has one of the world’s largest and most developed microloan sectors, with its roots stretching back to the early 1990s as development money poured in to rebuild the country after decades of war.

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