The Cambodia Microfinance Association (CMA) regarded the commentary by NGOs and civil society organizations on the industry as “biased, incomplete, and cherry-picked”, taking just the negative parts of a report produced by Germany’s Federal Ministry of Economic Cooperation and Development (BMZ) into account while ignoring the positive.
Kaing Tongngy, CMA’s spokesman, said that they rejected the commentaries by NGOs and civil society organisations which said Cambodia was in a severe crisis with microfinance debt. He said that the claims did not reflect the full report published by BMZ.
The reaction came after rights groups LICADHO, Equitable Cambodia and FIAN International issued a joint statement about the Cambodian population’s debt to microfinance institutions.
Tongngy said that NGOs and civil society organisations picked out only the negative points and released a statement which he said was unfair.
Citing BMZ’s report, the NGO’s statement said that there is great concern about the widespread debt in Cambodia, which is forcing many people to sell the land they put up for collateral to pay their loans back. The NGOs said this is related to serious human rights violations.
The NGOs said that more than 167,000 Cambodians have sold their land to pay back their loans in the last five years.
But Tongngy claimed that “if we look at BMZ’s report and compare it to the statement by the NGOs, we can see the difference and this is unacceptable. We are now looking into the BMZ report more seriously.”
The NGOs also cited a report by the Institute for Development and Peace (INEF) to make their statement. They said they recommended that general loans for the poorest families should be annulled and compensation given to the families that sold their land to pay debts, among other recommendations.
But Tongngy said that the standards and conditions of loans are different between Europe and Cambodia and that there is no one-size-fits-all standard. He said Europe may preferably provide loans to poor people, but Cambodia provides it to all people who meet the minimum requirements.
He said that the CMA has been flexible and accepted many recommendations and initiatives to protect debtors as well as to ensure the sustainability of the sector.
By the second trimester of 2022, microfinance has provided loans of $8.7 billion to nearly two million recipients, while savings had increased to $4.6 billion, according to the CMA.