In this first webinar of the webinar series “Financial Transformation, Credit Markets and Household Debt in Southeast Asia”, Dr Milford Bateman examines the microfinance sector using Cambodia as an illustration given that its microfinance sector is considered as the world largest and most profitable.
REGIONAL ECONOMIC STUDIES PROGRAMME WEBINAR
Webinar Series 2020-2021: Financial Transformation, Credit Markets and Household Debt in Southeast Asia
Monday, 7 September 2020 – ISEAS – Yusof Ishak Institute organised a webinar on “Microfinance in Cambodia: ‘Building-back-better’ in the post-Covid-19 Era Confirmation”. The webinar was delivered by Dr Milford Bateman, Visiting Professor of Economics at Juraj Dobrila at Pula University in Croatia; Adjunct Professor in Development Studies at Saint Mary’s University, Halifax, Canada; Honorary Research Associate, Royal Holloway, University of London, UK; and Associate Researcher, FINDE, Fluminense Federal University, (UFF), Rio de Janeiro, Brazil.
Dr Milford Bateman began his presentation by giving a brief introduction of the current state of the world amidst COVID-19. He explained the limited role of microfinancing as a response to the crisis. Temporary financial support was initially seen as sufficient to get Microfinance Institutions (MFIs) and clients through a short-lived crisis where the poor would still be able to repay their microloans. However, from July when it was evident that COVID-19 was going to last significantly longer than originally thought and that the economic damage was expected to be exceedingly greater, it made apparent that much bigger rescue measures needed to be taken instead. Hence, the attention was shifted towards promoting and planning for major bail-out programs. However, Dr Bateman pointed out the ineffectiveness of the bail-outs under neoliberal capitalism. He elaborated on the difference between rescuing ineffective systems and reforming them using the example of the bail out of Wall Street in response to the 2008 global financial crisis.
Next, Dr Bateman described the microfinance sector in Cambodia. He shared some background on its deployment in 1970s up till its expansion from 2009 onwards, as well as the various forms of financial support that have been received. Until recently, microfinance was seen by the international development community and Cambodian government as a hugely successful structure playing a crucial role in addressing poverty. He explained how only some benefitted from access to finance, but not the vast majority of the poor. Then he went on to address the opinions of some advocates that had come to notice the lacklustre impact of microfinancing on poverty reduction and development.
Lastly, Dr Bateman suggested possible ways to improve the bail-out method. While the lesson from the 2008 global financial crisis was that financial elites can and will block progressive change, he believes that the COVID-19 crisis shows some signs that things might be different now, and that positive change overall is both desired and do-able. He proposed two main goals of any bail-out program: (i) must assist in resolving the immediate objective of helping the community to survive the COVID-19 crisis and; (ii) must also create the core institutional foundations necessary to build a much more pro-poor, democratically-owned and managed, and explicitly developmental local financial system capable of promoting ‘bottom-up’ growth in the post-COVID-19 era. Additionally, he elaborated on Roosevelt’s solution of carefully using bail-out funding to benefit the global poor into the longer term.
The webinar concluded with discussant Dr W. Nathan Green and Dr Milford Bateman Corbett engaging in a question and answer session. Some of the questions discussed the role of the government, the Asian Development Bank and other aid agencies in providing directly targeted support as compared to microfinancing, the alternatives for community-based credit institutions, and the lack of action on the increasing MFI debt.