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NGOs invited to discuss MFI report

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Government spokesman Phay Siphan. Hong Menea

NGOs invited to discuss MFI report

Officials of NGOs Licadho and Sahmakum Teang Tnaut will attend a closed-door meeting at the Council of Ministers on Wednesday to explain the findings of their recent report claiming that increasing levels of debt at microfinance institutions (MFIs) has resulted in human rights violations.

The Council of Ministers on Friday issued two letters inviting Licadho president Pung Chhiv Kek and Sahmakum Teang Tnaut executive director Soeung Saran to the meeting under the theme of Microfinance and its Impact.

Licadho monitoring manager Am Sam Ath on Sunday said Licadho had decided to attend the meeting but he was unsure whether Chhiv Kek would attend or appoint a representative.

“She [Chhiv Kek] had just left for France when the invitation letter arrived. As a result, we don’t know if she can make it back in time. I’m not yet aware on what date she comes back, but she left on Friday morning and the invitation letter arrived in the afternoon of the same day,” he said.

Sam Ath said the closed-door meeting will help the government and his organisation understand each other’s perspective.

He said the purpose of the report is merely to call on MFIs to avoid human rights violations of their clients.

Saran told Voice of America on Thursday that he would attend the meeting and explain the study’s findings to avoid confusion.

The council’s invitation letters come after an August 7 report published by the NGOs entitled Collateral Damage, alleged that early this year some 2.4 million people in the Kingdom were indebted to MFIs to the tune of $8 billion.

With most of them struggling to repay the loans, the report alleged that they were required to pawn their land titles to the MFIs, with many cases resulting in serious human rights violations.

The two NGOs said MFIs harassed their clients, forcing them to sell off their land, resort to child labour and migrate due to lack of food, driving them deeper and deeper into the “debt-trap”.

Critics of the report noted that it was based on a mere three-week study and that interviews were conducted with only 28 families who had allegedly experienced serious human rights violations across 10 communes in Kampong Cham, Kandal, Prey Veng and Tbong Khmum provinces and Phnom Penh.

Out of them, 22 spoke about being forced to sell their land, 13 resorted to child labour, 18 saw family members migrate, 26 had to eat low-quality food and 22 borrowed money from private lenders, who charged higher interest rates, to repay their MFI loans.

Government spokesman Phay Siphan, who is also a minister attached to Prime Minister Hun Sen and will lead the closed-door meeting, could not be reached for comment.

However, he previously told media outlets that the invitation was intended for the organisation’s to stand by their findings and show integrity.

The National Bank of Cambodia and the Cambodian Microfinance Association said the report did not reflect the reality of the microfinance sector, but that they will investigate whether microfinance institutions have violated regulations.

However, Sam Ath stood by the organisations’ findings, highlighting that the report was not intended to represent microfinance institutions nationwide, but merely represented the experiences of people living in the research’s target areas.

“The policies of the government and microfinance institutions should improve the livelihood of citizens.

“So whenever policies affect the citizen’s rights and make them lose their land, it does not improve their livelihoods and affects the image of the government,” he said.

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