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SIEM REAP: Stuck under a mountain of crippling debt, Cambodian farmer Roorn Rith fears she will be forced to sell her land to pay off microfinance loans inflated by job losses due to the pandemic in her family.
She said what began with a $ 3,000 shark loan to attend her son’s wedding has now grown to about $ 7,000 – as a result of the additional financial needs that have arisen..
Her sons – who crossed the border illegally into neighboring Thailand – previously sent money home to help with repayment, but are now unemployed.
“Due to COVID, we were unable to find jobs . . . She told France Press, crying outside her modest home in northern Siem Reap province, and my son has no money..
Roorn Wraith, 50, is among over 2. 6 million Cambodians have switched to microfinance due to limited access to traditional banking services.
But in poor countries with little regulatory oversight, this practice has been criticized for predatory tactics including targeting rural villages where residents have limited financial acumen..
In Cambodia, where the average annual income is a meager $ 1,700, borrowers in 2019 accumulated a total of $ 10 billion in debt to the microfinance lenders.
That puts the kingdom on an average loan of $ 3,804 per person – the highest in the world, according to local rights group Likado.. .
Lack of implementation also led to illegal lenders offering « very high » interest rates of 30 percent over the course of a year, said Am Sam Ath of Lycado. .
He explained that the informal lending industry has long been a complex problem for the Kingdom, as Cambodians turn to licensed microfinance institutions to repay private sector lenders only to find themselves trapped in a cycle of debt to more lenders..
“With the spread of the COVID pandemic and floods in rural areas, people face a multiplier problem, with more difficulties regarding debt,”.
While Cambodia itself has only recorded about 300 cases, the epidemic has seen tens of thousands of migrant workers return from Thailand as jobs have dried up, putting families living in the pay-for-payment system under pressure..
In despair, Roorn Wraith and her husband traveled from their sleepy village Trapeang Veng to the capital, Phnom Penh, to search for jobs on construction sites, but were turned down due to their age..
She is anxious the next time debtors come because they will bully her to sell her house and the rice fields that they keep as collateral..
Surrounded by lush rice fields, the remote Trapeang Veng can only be reached by off-road, 50 km from the tourist attraction of Angkor Wat.
Faded posters announcing « easy cash » are placed on coconut trees throughout the village, promoting loans as a simple path to fulfilling aspirations from motorbikes and tractors to dream homes.
These homes are hard to miss, village chief Dorm Deam said, pointing to a concrete house with decorative woodcuts on the locked front door.
Today, more than three-quarters of the 113 Trapeang Veng families owe a total of approximately $ 300,000 USD.
Human rights groups called on the government to freeze payments and demanded that lenders return more than a million title deeds to the lands held as collateral.
Chia Seri, director of the Cambodian National Bank, said that about 270,000 Cambodians have had their loans restructured in recent months to cope with the economic fallout from the virus.. .
With many working-age Cambodians migrating to neighboring Thailand for work – up to 2 million people according to rights groups – the remaining residents of Trapeang Veng are mostly elderly and children.
Villager Binh Tai says her daughter and two sons crossed the border, but lost their jobs after the virus outbreak.
“I was hoping that my children in Thailand could help, but now they don’t have jobs,” the 53-year-old told AFP as she combed her granddaughter’s hair.
With a combined debt of US $ 20,000 to a microfinance group and two informal lenders, Binh Tai said she cries until she sleeps at night..
« I am afraid that I will lose my house and I have no place to live, » she said, adding that her neighbor was forced to sell.
Cambodia, Coronavirus, Finance, Debt, Microfinance
World News – African Union – ‘Debt Strangulation’: Coronavirus – 19 Deepens Cambodia’s Loan Crisis
Ref: https://www.channelnewsasia.com
