How Microfinance Failed the World's Poor
7/14/202625 min
Microfinance was once hailed as a miracle cure for global poverty, promising to empower the world's most vulnerable with small business loans. But in countries like Cambodia, the industry has devolved into a cycle of predatory debt that is leaving families struggling. WSJ’s Gabriele Steinhauser explains why this once-celebrated solution has failed so many. Jessica Mendoza hosts.
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Clips
Transcript preview
First 90 secondsJessica Mendoza· Host0:00
[instrumental music] Prom Tor is a farmer in Northwest Cambodia. He's 40 years old. He and his wife have three kids.
Gabriele Steinhauser0:21
[instrumental music] Spicy salad.
Jessica Mendoza· Host0:22
He grows vegetables like curly cabbage and wax gourd that he harvests by hand.
Gabriele Steinhauser0:32
He rents a plot of land from the government, and he grows vegetables, and his wife sells those vegetables on the local market.
Jessica Mendoza· Host0:41
Our colleague Gabrielle Steinhauser went to meet him near his farm in Battambang Province. [instrumental music] A few years ago, Prom Tor and his family wanted to expand their small farm. The hope was that they ultimately could start earning more money, so he took out a loan from a local lender.
Gabriele Steinhauser1:01
[instrumental music] He took a first loan of $1,000 to sort of, you know, buy some farming inputs and just sort of increase his yield. He thought, "I can earn more money and, you know, like, kind of make a better life for my family."
Unknown speaker1:22
[instrumental music]