The rapid expansion of micro-credit in Cambodia has left debt levels relative to incomes at world record levels, and is leading to ever-higher human and social costs as families try to keep servicing their loans.
Micro-credit was originally designed as a way to help the poor. It has turned into a way for unscrupulous financial institutions to prey on the weakest in society using the alibi of “financial inclusion.” Aggressive door-to-door canvassing by micro-credit lenders is carried out to hit sales targets. All that the industry can claim to have achieved in Cambodia is to have worsened the poverty and distress of the population.
Proponents of micro-credit claim that it can be effective in all impoverished societies. This ignores the central importance of the political and institutional contexts of different countries. In Cambodia, micro-credit has been rolled out against a backdrop of a profoundly weak and corrupt state. This has led to the population being left to defend itself against voracious and unprincipled lenders.