Credit as Coping: Rethinking Microcredit in the Cambodian Context

Abstract

This article explores the uses and meanings of microcredit in one Cambodian community, drawing on qualitative research to argue that what it is claimed that microcredit provides is substantively different from what it means in practice for many rural Cambodian borrowers. In particular, my findings suggest three key disconnects between the rhetoric and reality of microlending. First, while microfinance institutions (MFIs) assert that loans are used for and repaid via microenterprise, my data suggest that loans are primarily used for a variety of non-productive purposes, and are most frequently repaid through wage labour both within and outside the country. Second, whereas MFIs assert that microcredit offers a substitute for high-interest informal loans, in practice microcredit is often used alongside informal credit and drives the need for higher-interest informal borrowing. Third, whereas loans are argued to offer proactive ways of livelihood improvement, in practice borrowers often struggle to repay loans, and debt can substantively heighten vulnerabilities. These findings challenge the primary goals and stated expectations of microcredit, and raise questions about the potential of microcredit as a development strategy in the Cambodian context.