Cambodia Microfinance Should be Taxed to Address Climate Change Impact, Research Says

In contrast to the industry’s claim that microfinance allows borrowers to expand their businesses, many Cambodians “have no choice but to borrow to make ends meet.”

New research from Cambodia challenges the microfinance industry’s assertions that its loans help farmers to resist the impacts of climate change.

In fact, the research argues, microfinance undermines the capacity of farmers to respond to unstable climate conditions. The profit from Cambodia generated by foreign-owned microfinance institutions should be taxed and the proceeds used to set up funds to address climate change impacts in Cambodia, the report says.

The report, which was published by U.K.-based academics at the universities of London, Reading, and Greenwich, draws from research conducted in three villages in the provinces of Prey Veng, Kampong Cham, and Battambang between October 2020 and February 2022. The villages are not identified to protect the anonymity of respondents.

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