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https://asia.nikkei.com/Business/Busine ... my-at-risk

These greedy people are destroying lives and eventually the economy of Cambodia.

More here. There's a lot of articles on the subject at the moment. All of them pessimistic.
business-and-finance/cambodia-has-big-p ... 23572.html

I met a young kansas bloke about 10 years ago who was working for an "aid" NGO providing microfinace.
Supposedly on the Grameen model. (which is great)
Interest rate of 30% per month and this earnest young man thought he was doing the poor farmers a favour.
I tried to talk to him about the realities and implications around that, how bad it would end for some, but he just did not want to know.

The honourable PM, i believe, recently set a max of 20% /mnth interest but this is still a disaster to my mind.
The small land holding of the (decreasing) majority of Cambodian's families is the most basic foundation of their lives.
It means EVErything, and it is so easily lost these days - to the man holding out the pen.

SternAAlbifrons wrote: ↑Thu Aug 08, 2019 1:17 pm I met a young kansas bloke about 10 years ago who was working for an "aid" NGO providing microfinace.
Supposedly on the Grameen model. (which is great)
Interest rate of 30% per month and this earnest young man thought he was doing the poor farmers a favour.
I tried to talk to him about the realities and implications around that, how bad it would end for some, but he just did not want to know.

The honourable PM, i believe, recently set a max of 20% /mnth interest but this is still a disaster to my mind.
The small land holding of the (decreasing) majority of Cambodian's families is the most basic foundation of their lives.
It means EVErything, and it is so easily lost these days - to the man holding out the pen.

as they say, the pen is mightier than the sword.

MFI interest rates are capped at 18% per annum.

Australia called to reassess ties to Cambodian microfinance amid reports of child labour, debt bondage

The sleeve of Srey Pheak's pink-striped T-shirt hangs loose from where her right arm used to be.

Key points:
A new report alleges microfinance institutions have led to serious human rights abuses
The Collateral Damage report links Australian aid to Cambodia's microfinance sector
Microfinance proponents maintain that when "done well" the sector reduces poverty
"It still hurts when the weather is cool," she said. "It's just too hard to play."

The 10-year-old was working in a Cambodian brick factory in March this year when her hand slipped into a clay-slicing machine, severing it.
https://www.abc.net.au/news/2019-08-11/ ... t/11386962

And a poster on the other thread is concerned about how financial companies can make a profit when people are irresponsibly taking loans. I doubt the ten-year-old child had much say in whether she went to work to pay off her families loan. I hope the bricks in his house were made in a safe, reputable factory that doesn t employ children, not the kind of thing that likely crossed his mind though

I am pretty scathing of the MFI sector - but many people say it is better than the traditional lending/loan-shark systems.
I am not so sure about that, but don't know enough about it.
Anybody??

Put your money in a fixed term of 1 year and you will get 3.5 % interest if you deposit over $5000 USD. Lend the money to a farmer, have the loan secured by his land and you get an 18% return. It is a loan shark system.

18% for a small loan of $750 secured by land is outrageous? How about $30,000 secured by a working rubber plantation with a market value of over $200K and you still pay 15% (second largest if not largest bank in Cambodia).
Compared to those loan sharks in local markets 18% is a pittance. They charge more than 100%, e. g. loan $500 and pay $50 in interest per month. Of course, it is unsecured. At least the MFIs are regulated and backed by large banks.
That report used 29 families for its 'research', hardly representative compared to 1.8 million customers. Loans are the fuel for economic growth.
Indebtedness - the U. S. is practically broke with the average household in debt up to their necks, maxed out credit cards, mortgages, etc.

rubberbaron wrote: ↑Mon Aug 12, 2019 12:24 pm 18% for a small loan of $750 secured by land is outrageous? How about $30,000 secured by a working rubber plantation with a market value of over $200K and you still pay 15% (second largest if not largest bank in Cambodia).
Compared to those loan sharks in local markets 18% is a pittance. They charge more than 100%, e. g. loan $500 and pay $50 in interest per month. Of course, it is unsecured. At least the MFIs are regulated and backed by large banks.
That report used 29 families for its 'research', hardly representative compared to 1.8 million customers. Loans are the fuel for economic growth.
Indebtedness - the U. S. is practically broke with the average household in debt up to their necks, maxed out credit cards, mortgages, etc.

What Is Microfinance?
Microfinance, also called microcredit​, is a type of banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services. While institutions participating in the area of microfinance most often provide lending—microloans can range from as small as $100 to as large as $25,000—many banks offer additional services such as checking and savings accounts as well as micro-insurance products, and some even provide financial and business education. The goal of microfinance is to ultimately give impoverished people an opportunity to become self-sufficient. https://www.investopedia.com/terms/m/microfinance.asp

Yes, rubberbaron, I am sure your butt is sore if you are paying those interest rates given your amazingly successful business, I am surprised that you were not offered private financing. Oddly microfinance companies are not in the business of lending to such exemplary business tycoons or those with the vast holdings you so proudly display, which make their loans more tenuous. I agree that the mfi s do not charge as much as the market loan sharks and likely do not have a company policy to break legs if the loan is not repaid on time. You are also correct that the U.S. is practically broke, though I doubt it is a major concern to Cambodians seeking loans from microfinance companies or even relevant to the topic being discussed.
Surely you and others like yourself do not get anywhere near 10% interest on your savings, I am surprised that one would invest in a working rubber plantation given rubbers long slide since February of 2011. Certainly, if you were to lend the $200,000 out at 18% on a 7-year term your return would be $153,099.68. Quite a tidy profit for sitting on one's duff and patting themselves on the back for their effort to help impoverished people become self-sufficient.
18% on a secured loan is robbery, plain and simple. Poor, financially ignorant people of little means are being royally F ed. It doesn t matter what the rich are charged in interest, whether the USA is broke or how long one has to wait in line at the food back in Selma, Alabama. If Cambodians are to be able to lift themselves out of poverty they will need help. Financial education, contracts that are written in a simple language where the clauses are understandable and reasonable interest rates would go a long way to solving the problem.