A recent report outlining predatory lending by local microfinance institutions by a Cambodian human rights agency – the Cambodian League for the Promotion and Defense of Human Rights (LICADHO) – has been found to “lack a comprehensive study and is without the participation of all relevant parties,” according to a senior official at the National Bank of Cambodia (NBC).
Kith Sovannarith, Deputy Director General of Banking Supervision at the NBC, has responded to the report titled, “Driven Out: One village’s experience with MFIs and cross-border migration,” telling the Khmer Times yesterday that, we need to consider the measures mentioned in this report.
They only took one of the more than 14,000 villages and interviewed 30 families of more than 2 million microfinance borrowers. This number represents approximately 0.007 percent and 0.001 percent, and they just interviewed family members.
He also explained that about $444 million in loans were provided to more than half a million clients (25 percent of microfinance borrowers) without collateral.
“At the time of the COVID-19 outbreak, microfinance institutions offered more than 95,000 clients with over $373 million of loans to restructure their debt if they were considered in hardship due to the virus,” Sovannarith said.
“We welcome a true comprehensive and inclusive study of relevant and constructive stakeholders,” he said.
The “Driven Out One village’s experience with MFIs and cross-border migration,” report implies that throughout Cambodia’s northwest, widespread microfinance debt is pushing families from their homes to find work across the Thai border.
“Focusing on a single village in Banteay Meanchey province to dig deeper into the link between microfinance debt and migration in Cambodia’s borderlands. Through interviews conducted with remaining family members from 30 households, LICADHO’s researchers found that over indebtedness to microfinance institutions (MFIs) was the primary motivating factor for migration in the village,” the report states.
“Far too many families have had to leave their homes and their country to repay microfinance institutions,” said LICADHO director Naly Pilorge.
“Now, with tens of thousands of former migrant workers unable to work in Thailand due to COVID-19, the government and MFIs must help these borrowers by suspending repayments and returning land titles,” she added.
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