Symbiosis of Microcredit and Private Moneylending in Cambodia

Abstract

Microcredit's potential for poverty reduction is a highly contested issue. In Cambodia, the dramatically increasing commercial microcredit coexists with widespread private moneylending. These two practices are rooted in different economic world views: neoliberalism on the one hand, and the traditional Khmer economic sociality permeated by patronage on the other. The ethnography shows that far from competing with each other, microcredit and private lending have adapted to form a symbiotic relationship, and much private lending is financed through microcredit. While microcredit is often beneficial to people living well above the poverty line, the widespread access to credit, through microloans as well as private lending, is threatening the livelihoods of the economically most vulnerable and precipitating their social, economic and spatial exclusion from their local communities. In contrast to the social and economic exclusion caused by land grabbing and forced evictions, which has received a fair amount of public attention, exclusion as a consequence of indebtedness has, for sociocultural reasons, remained much less visible.

Keywords:

• Cambodia
• Microcredit
• Debt
• Exclusion
• Patronage
• Poverty
• Structural Violence

Acknowledgements

Fieldwork on microcredit in Cambodia was conducted intermittently between 2009 and 2014 in collaboration with Heng Kimvan and Chen Sochoeun, Royal University of Phnom Penh. Perceptive comments from the journal's reviewers led to significant improvement of the manuscript.

Funding

Funding from the Swedish Research Council is gratefully acknowledged, 2007-23978-50212-15.

Notes

[1] We have put quotation marks around the word ‘Chinese’ because it is important to note that being ‘Chinese’ in Cambodia today has very little to do with ethnicity in the usual anthropological sense as being a marker of a separate identity or a determinant of group affiliation; it is nowadays primarily an occupational category. As the basis of the wealth of the Khmer kingdom began to shift from agriculture to trade in the fifteenth century onwards, significant numbers of Chinese immigrants from the southern provinces of Guangxi and Guangdong found trade and business opportunities in the country; others took leases on land to grow vegetables and fruit for the market (Willmott 1967). These commercial occupations, comprising finance (and of late also including the microfinance business), have set them apart from the Khmer who were predominantly rice farmers (or civil servants, schoolteachers and technicians if they had had a secondary or higher education); that basic distinction still largely holds. But in most other respects, the ‘Chinese’ are also Khmer; they speak the Khmer language and follow Khmer customs (call in Buddhist monks to their wedding and funeral ceremonies, for example). The distinctive ethnic Chinese society that existed earlier, and qualified Cambodia as a ‘plural society’, had largely disappeared by the 1970s (Willmott 1967, 1981). Almost the only things that give the ‘Chinese’ away nowadays are the Chinese shrines that are found in almost every market, shop or restaurant, and the surprisingly large number of people who celebrate the Chinese New Year.

[2] Indeed, a nineteenth-century Cambodian law stipulated that the amount of interest paid on a loan must not exceed the amount of the principal (Aymonier 1900, 86).

Additional information

Funding

Funding: Funding from the Swedish Research Council is gratefully acknowledged, 2007-23978-50212-15.