Microfinance Practice: Re: [MFP] Debt relief for Cambodians & why legal aid matters

Dear All
As Jami said, the MF sector in Cambodia is in desperate straits adn the recent threat to dispossess the poor of their land if they do not stop opposing the government is a pretty worrying development. With Cambodia the world's best example where land titles are used (nearly all microloans nowadays demand a land title or titles) as collateral on a microloan. But although Hernando de Soto and then the World Bank too famously said that this procedure - land titles used as collateral - would magically transform any economy, the result has been a disaster for Cambodia - increasing vulnerability, disempowerment, loss of land, profit extraction from teh poorest communities now at Wall Street levels, etc......I attach my paper that was accepted to be presented at the World Bank's Land and Poverty conference in Washington DC earlier this year (cancelled for obvious reasons) if anyone wants a fuller account of the damage caused by land titles being used as collateral.
The loan forgiveness measures in Cambodia appear temporary adn there is no idea what will happen when the 3 month period is up. Will the poor end up further in debt? With almost all micoloans now used adn repaid by garment industry workers and migrants to Thailand, how will these icoloans ever be repaid since neither sectorp looks like coming back anytime soon?
Anyway, whatever happens, it is clear that simply bailing out the MFIs is crazy and they need to 'buildbackbetter', to use the current parlance, which menas creatively changing the structure of MFIs supported by external sources, by converting them into credit unions or financial coops for instance. It is just crazy to bail out the MFIs that have been coining it in Wall Street-style these last few years then using funds that coudl go directly to the poor to bail out the wealthy shareholders adn investors based in Switzerlandm Hong Kong, New York, Netherlands, etc. One MFI - LOLC - pocketed more than $US200 million in just two years buying and then selling Prasac! LOCL people were pretty lucky you have to say - selling by far their highest performing global asset last year in anticipation of the sector contracting....
As everywhere else, an MFIs adherence to the Smart Campaign guidelines is simply a PR move. They have all been coining it in and Smart have said nothing. Time to abandon such silly thigns as Smart adn Truelift and other such PR measures designed to cover up for repreated transgressions. With ACCION one of the world's worst transgressors itself (Re; Banco Compartamos) its like putting Bernie Madoff in charge of US financial regulation!
Chuck was also right about the PR measures taken by such as AMK - to pay some microcreit and Social Performance Management (SPM) 'thought leaders' to prepare a book signing the praises of AMK but totally unethically pretending it was somehow an 'objective analysis'. Leading so-called 'social impact investors' in AMK - Agora and Incofin - were also guilty of making huge profits but covering up for them. I have a short article on the AMK saga coming out in a journal soon I can send if anyone is interested in the whole sordid affair, particularly with regard to AMK's $US140 million secretive (reversed then continued) sale to an aggressive Taiwan-based private bank.
Best
Milford

Milford Bateman
Visiting Professor of Economics, Juraj Dobrila University of Pula, CroatiaAdjunct Professor of Development Studies, St Marys University, Halifax, CanadaHonorary Research Associate, Royal Holloway, University of London, UK. Associate Researcher, FINDE, Fluminense Federal University, (UFF), Rio de Janeiro, Brazil.__________________________________________________Address: Villa Nina, Nova Cesta 20B, Opatija 51410, CROATIAHome/office: +385 (0)51 701 347
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Email: milfordbateman@yahoo.com
Download my recent papers at: https://www.researchgate.net/profile/Milford_Bateman

On Sunday, June 28, 2020, 9:41:49 PM GMT+2, Hsu Ming-Yee mingyee0706@yahoo.fr [MicrofinancePractice] <microfinancepractice@yahoogroups.com> wrote:

Dear all,
As a microfinance practitioner in Cambodia, I sympathize with what Jamie and Chuck have described. The picture they paint may however be too bleak. I would like to add two points for you to ponder:
1. The title of the press article mentioned by Jami is misleading. The prime minister Hun Sen does not advocate a general seizure of property of clients who cannot repay, his threat is a reply to a call by an opposition leader to refuse to repay loans issued by banks linked to Hun Sen's family. The following sentence, taken from the same article mentioned by Jami, provides a more balanced picture: Hun Sen: "... I encourage the banks to seize the collateral of those who believe the propaganda [by the opposition leader]. For those who are trying to pay off their loans, I appealed to the banks to understand them because this is a very hard time."
2. The National Bank of Cambodia has asked MFIs to restructure the loans of clients in difficulty in the current coronavirus pandemic. According to the Cambodian Microfinance Association, as of the third week of June, total restructured loans across all MFIs amounted to more than $1 billion with 220,000 customers given approval among 230,000 customers who have made a request. This is a very high approval rate and close to 10% of all MFI clients in Cambodia.
A final note on the NGO LICADHO mentioned by Jami. I met its staff last month to discuss its work on microfinance. They are frustrated that the sector does not heed their calls for change. Much of the sector is now profit-oriented, as Chuck has described, but most leading MFIs, I feel, still care about the Client Protection Certification of Smart Campaign, perhaps for their reputation and for attracting investors. According to LICADHO staff, the certification assessors who visit the Cambodian MFIs never talk to clients independently. This could perhaps be an improvement worth considering...
Kind regards,
Mingyee

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