A crisis anxiety in cambodian microfinance

Cambodia is in the midst of an over-indebtedness crisis. The culprit? Microfinance. In the past 15 years, the number of cambodians who borrow from a microfinance institution beck’s anxiety inventory test pdf (MFI) has increased five-fold, with household debts to mfis now three times greater than beck’s anxiety inventory test pdf per capita national income. The situation has become so dire that in 2017 a beck’s anxiety inventory test pdf coalition of microfinance investors commissioned a nationwide study into the beck’s anxiety inventory test pdf problem of over-indebtedness. With one-in-three borrowers found to be objectively over-indebted, however, the results were too shocking to publish. The industry buried the report, which was only recently leaked to a handful of researchers beck’s anxiety inventory test pdf and journalists.


Many people think that microfinance alleviates poverty; certainly it is not supposed to cause it. That ideal was lost, however, when the microfinance industry went down the path of neoliberal beck’s anxiety inventory test pdf financialization in the 1990s. Since then, the problem of economic justice has shifted from financial exclusion beck’s anxiety inventory test pdf to financial inclusion. Globally, most people borrow from an MFI to meet basic needs beck’s anxiety inventory test pdf like healthcare and home improvement, not engage in entrepreneurial activity. It is for this reason that ananya roy has dubbed beck’s anxiety inventory test pdf microfinance the new subprime frontier of financial capital.

In my transactions article, I argue that microfinance in cambodia has also grown rapidly beck’s anxiety inventory test pdf because of another popular technology of development: the land title. Since the early 2000s, when the cambodian government titled many areas of the country beck’s anxiety inventory test pdf for the first time, the largest mfis in the country have made a land beck’s anxiety inventory test pdf title an essential requirement to access a loan. Land titles provide collateral on risky loans, which industry proponents have argued is necessary in order to beck’s anxiety inventory test pdf include more people into formal financial markets.

In this sense, cambodia’s over-indebtedness crisis is the outcome of two globally-hegemonic development technologies that reinforce one another. As the country emerged from nearly three decades of conflict beck’s anxiety inventory test pdf in the 1990s, its national leaders were cajoled into adopting neoliberal reforms to beck’s anxiety inventory test pdf restructure their economy. To reduce poverty in rural areas at that time—where 90% of the country’s poor lived—the government, its donors, and economic advisors championed land titling programs and microfinance side-by-side. The government continues to support these development technologies. At the launch of a major new titling program in beck’s anxiety inventory test pdf 2012, for example, prime minister hun sen declared that cambodians could deposit their beck’s anxiety inventory test pdf new land titles in banks in request for loans to beck’s anxiety inventory test pdf develop their livelihoods.

In sum, the cambodian microfinance industry has grown rapidly in large part beck’s anxiety inventory test pdf because credit officers like dara have turned land into a beck’s anxiety inventory test pdf financial asset. However, like in most situations where land becomes enrolled into financial beck’s anxiety inventory test pdf markets, the cambodian microfinance industry has built-in contradictions that will likely undermine its continued growth. Already there are rumblings of a double movement, as industry leaders and civil society activists alike publicly acknowledge beck’s anxiety inventory test pdf the problem of over-indebtedness.

If cambodia were to see an economic slow-down, perhaps by losing favorable trade status with its largest trading beck’s anxiety inventory test pdf partners such as the european union, then the microfinance industry may face a situation of large-scale default. Unfortunately, as previous financial crises have shown time and time again, it is rarely those who profit that will suffer the beck’s anxiety inventory test pdf consequences. Better recognition of how collateralized microfinance fits into this picture beck’s anxiety inventory test pdf is but a first step in preventing such a calamity.

RELATED_POSTS