The Dark Side of Microfinance

This chapter critically examines the intersection of predatory microfinance practices and their impact on women’s safety, economic security, and freedom. While microfinance institutions are often promoted as tools for economic empowerment, exploitative lending models disproportionately affect women, reinforcing cycles of poverty, deepening gender inequalities, and heightening vulnerability to violence and exploitation. Cambodia has the highest microfinance debt per capita in the world, with borrowers increasingly falling into debt bondage due to unregulated lending practices, high-interest rates, and the aggressive expansion of private microfinance institutions. Women, who make up the majority of microfinance borrowers, often bear the brunt of these financial pressures, leading to asset seizures, land dispossession, and, in extreme cases, coerced labour or sexual exploitation as a means of debt repayment. Using a feminist political economy lens, this chapter explores how profit-driven microfinance models, rather than fostering economic independence, can entrench financial precarity and exacerbate gender-based violence. Drawing on case studies, empirical research, and policy analyses, it critically assesses the systemic harms perpetuated by predatory lending and the broader implications for women’s rights and economic justice in Cambodia and beyond.