Microfinance Debt as a Vulnerability Factor for Modern Slavery in Cambodia and Thailand

This chapter explores the nexus between microfinance debt and modern slavery in Cambodia, one of the most microfinance saturated countries in the world. It draws from semi-structured interviews with key informants in non-government organizations and United Nations agencies in Cambodia and Thailand. Cambodians enter into microfinance loans for a number of reasons, including for consumption purposes, and many are soon unable to meet the regular interest payments, leading to the confiscation of their land and often an associated loss of livelihood. Often this situation leads borrowers to transfer their microfinance debt to brick kiln owners, thus falling into a situation of debt bondage. Others undertake irregular migration journeys to Thailand and other destination countries, where they may end up in situations of modern slavery. The chapter further highlights the aggressive lending practices of microfinance institutions in Cambodia and the fundamental shift away from the original social-mission driven Grameen Bank model. The chapter also explores the failures of the Cambodian business and government sectors to regulate the microfinance sector and address the practice of predatory lending. Few scholars have explored how microfinance indebtedness makes borrowers vulnerable to modern slavery. As such, this chapter contributes to the evidence base.