"Opinion: Human Rights and Ethical Concerns in Cambodia's Microfinance Sector", 2 April 2021

Cambodia's MFI sector would benefit from reform focused on protecting borrowers' land rights… They are correct to write that solutions to this crisis can only come with discussion and action from all actors, including investors such as Germany, civil society, and the government…

We agree that the sector desperately needs transparency. In our first report published in 2019, LICADHO and STT called for greater transparency on the number of land titles held by microfinance institutions (MFIs) in Cambodia. Additional data mentioned in their op-ed, such as breakdowns of loan amounts and publication of effective interest rates, would be a welcome addition…

There are areas where I disagree with the pair’s op-ed as well. They say that structural weaknesses in the microfinance sector only became apparent during the COVID-19 crisis, but economists, human rights NGOs, and even internal reports from the sector itself have been pointing to reckless growth, a lack of consumer protection and the negative effects on borrowers for years. Along with NGO and union partners, LICADHO has interviewed hundreds of MFI borrowers who have experienced a human rights abuse as a direct result of their microloans. To repay loans, these borrowers almost all reduce their food consumption, in some cases dangerously so. Coerced land sales that take place outside the legal system are sadly widespread, and often take place under immense pressure from credit officers at leading microfinance providers… Any one case of any of these abuses is too many for a development project, and the fact that local NGOs are documenting hundreds of such abuses with no proper monitoring and redress mechanism in place is deeply troubling…