Is the World Bank to Blame for the Cambodian Microfinance Crisis?
For the past five years, Cambodia’s microfinance sector has been experiencing a major over-indebtedness crisis. And as inclusive finance consultant Daniel Rozas explains, despite multiple warnings that the sector was overheating, IFC, the World Bank’s private investment arm, poured fuel on the flames by investing in the largest and fastest-growing of the country’s leading microfinance institutions. Making matters worse, after an investigation by IFC’s own ombudsman concluded that clients had been harmed due to its failure to monitor the social risks created by its investments, its board dismissed those findings. He explores how the industry went off the rails in Cambodia, and argues that IFC not only worsened the crisis, it helped undermine the sector’s own efforts to avert it.
