For Some, Micro-Debt Results in Farm and Livestock Seizures

A handful of indebted farming families in Banteay Meanchey province have lost farmland and cattle, while 27 others are appealing for help to replay loans to five mi-crofinance institutions, a number that is likely to grow, local officials said Tuesday.

Pat Seum, chief of Thmar Puok district’s Kouk Kathin commune, said that, in the last two years, 140 families, almost 10 percent of the residents in nine local villages, have taken micro-loans of $150 to $1,500 from lenders such as Hattha Kakse-kar, Sathapana and Acleda Bank.

Two families in the past few months have fled to Thailand because they are unable to pay and have seen livestock and four hectares of land seized and auctioned by local officials to repay their debts.

Earlier this week two micro finance lenders seized a cow and a motorcycle, Mr Seum claimed, adding that a further 27 families are completely unable to pay their loans and this number is expected to grow in the coming month.

“I speak honestly. I am not blaming these microfinance institutions,” said Mr Seum, adding that the loans were made at between 2.5 and 3 percent interest.

“My people do not intend to flee their debt. They just need the lenders to understand their hardship by delaying the time for payment,” he said.

Chou Tao, a farmers’ representative in Banteay Meanchey, said Thursday that late payments of loans were on the rise as most farmers had invested in cassava.

Because of the global economic crisis, and the recent drop of cassava prices to as little as 80 riel, or $0.02, per kilogram, many local farmers are facing bankruptcy, he said.

“Now the cassava market is worthless,” he said. “Villagers are leaving their cassava in their farms because if they harvest it, there are no buyers.”

The National Bank in 2007 urged commercial banks to support microfinance institutions to help lift families out of poverty. However the share of loans seeing late payments has tripled to 3 percent since last year, according

to the Cambodia Microfinance Association.

In Channy, president of Acleda Bank, denied that his bank had been involved in any seizures of property.

“We do not have the obligation to auction borrowers’ property, only the court,” he said, adding that micro-loans are often extended to groups, not individuals.

Cambodia Microfinance Assoc-

iation Chairman Huot Ieng Tong, also director of Hattha Kaksekar micro finance lender, said he too was unaware of any seizures by his micro bank. However he said delaying loan payments was “impossible.”

“Everyone should be proud of these people who have the will to repay their loans,” he said.

Mr Seum said Thursday that he was personally too poor to cover the overdue loans in his commune and that the lenders should consider rescheduling the payments.

“If they disagree, it seems as though they are providing loans just to seize property from people when the economy is in decline,” he said.




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