Microfinance was hailed as a way to change the lives of hundreds of millions of people without access to credit. It worked so well that Grameen Bank founder Muhammad Yunus was awarded a Nobel Prize. But then, banks jumped in to get in on the profits. To manage high debt levels, Cambodians are migrating for work, eating less and even pulling their children out of school.
  • livus@kbin.social
    8·
    1 year ago

    Microfinance promised to help lift millions of people from poverty in the Global South. It’s a way for low-income individuals to access credit — something they couldn’t receive from traditional financial institutions, like banks. 

    It came to Cambodia in the 1990s as a poverty-alleviation strategy after decades of civil war. At first, microfinance was run by nongovernmental organizations with a number of checks and balances on the size of loans, the number of loans given and interest rates, according to Nithya Natarajan, a lecturer at King’s College London.

    But in the early and mid-2000s, commercial banks took over microfinance and wanted to make more profit.

    “Those checks and balances were largely eroded because the commercial push meant that the emphasis was more on expanding the market, trying to reach new consumers all the time. So, it went to more poor and more precarious households,” she said.