Challenging Third Sector Approaches to Poverty Reduction by Creating Neoliberal Subjects

How microfinance has become a push factor for human trafficking in Cambodia

In Partnership with Dr Deanna Davy – Independent Researcher for the UN Drugs and Crime Unit, Bangkok

Project Summary
This is a qualitative research project with NGOs and other institutions that work to assist people caught up in human trafficking in Cambodia and Thailand. It set out to explore the nexus between microfinance lending in Cambodia and irregular migration and trafficking in persons in the Greater Mekong Sub-region. It is a critical area of research as unsubstantiated arguments continue to be put forward that support microfinance lending as a strategy for reducing poverty and preventing the exploitation of the poor, when profit-driven microfinance in Cambodia appears to be exacerbating poverty problems across Southeast Asia.

As a first step in this pilot project, ten interviews were conducted with people working within organisations on the frontline of human trafficking in Cambodia and Thailand. In a context where international funders are willingly funding microfinace ‘development’ and poverty initiatives, the study has this far illuminated a culture of aggressive microfinance lending in Cambodia, as well as the consequences for borrowers of the loans. This includes acute financial stress for individuals and families, debts being passed from generation to generation, desperate efforts to repay loans through risky migration to Thailand and other countries, and exploitation and trafficking in persons. The paper also addresses NGO workers’ observations on the limitations of microfinance lending as a panacea for poverty, and highlights NGO workers’ suggestions for more effective and sustainable poverty reduction programs in the region.

Analysis of the data also explores the construction of poverty stricken individuals, families and communities as neoliberal subjects and how the third sector is captured and implicated by market-driven solutions to poverty. This research suggests that loans are being granted to Cambodian individuals who have no real capacity to make regular repayments as many borrowers have multiple loans, little collateral or savings, and limited financial literacy. Despite this, microfinance lending in Cambodia has increased significantly in the past decade, having recorded a 127% increase between 2013 and 2014 (Simanowitz & Knotts, 2015). Approximately 167 licensed microfinance institutions now operate in the country, with only a handful situated in the third sector. The microfinance institutions currently serve approximately 1.8 million Cambodian borrowers in a country with a total population of 15 million (Simanowitz & Knotts, 2015). Total outstanding microfinance loans in 2011 amounted to USD711.8 million (Marks, 2011).

Project Location: Cambodia & Thailand

For more information, please contact:
Ruth Phillips