Cambodia’s Microfinance Institutions (MFIs) have been hit hard by the COVID-19 pandemic, amid claims that that overlending to poor borrowers, who can ill-afford to repay, has resulted in land seizures and the further immiseration of the poor.
Ron Bevacqua is an accomplished economist and the author of “Building an Inclusive Financial Sector,” a new book about the microfinance industry in Cambodia, which is available through the National Bank of Cambodia.
Contrary to widespread opinion, Bevacqua argues that Cambodia’s MFIs are not necessarily in crisis, but nor should microfinance be seen as a panacea for poverty.
“To be sure, many microfinance clients do succeed in increasing their income,” he writes. “But the ratio of success stories is low enough that it cannot be said that gaining access to financial services systematically reduces poverty.”
A U.S. citizen with 27 years’ experience in banking and finance in Asia, Bevacqua was the chief economist for Merrill Lynch and Commerz Securities in Japan (1993-2002), and a contributing editor for the Economist Intelligence Unit.
He spoke candidly with Luke Hunt about Cambodia’s troubled MFIs.
Luke Hunt can be followed on Twitter @lukeanthonyhunt