Report Calls on Germany to End Support for Cambodian Microfinance

A large public survey of rural Cambodian households commissioned by the German government to investigate microloans found over-indebtedness, pressure to sell land and aggressive door-to-door marketing, and calls for phasing out public funds from the sector.

The report, “‘Micro’ Finance in Cambodia,” highlights the ballooning of Cambodia’s MFIs over the past decade that saw a steep rise in loan sizes among households and competitiveness among lenders. It says the lending is no longer “micro” or targeted at poverty relief, and German taxpayer funds would be better spent on other aid initiatives.

It also calls for canceling loans to the country’s poorest households who receive ID Poor subsidies, as the government has deemed they do not have enough income for subsistence so lenders should not have assessed that they could repay a loan. The survey was initiated by the German parliament based on rising criticism about the Cambodian MFI industry, including from local rights group Licadho and German NGO Fian.

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