Hundreds of families saddled with crippling loans after being forced out of their homes along the country’s dilapidated railway tracks have been left in limbo at the end of a one-year debt-relief project that failed to help most of them.
The Asian Development Bank (ADB), which paid the bulk of the $143 million it was originally expected to cost to rehabilitate the country’s neglected train tracks, hired VisionFund Cambodia for the debt-relief project in mid-2015. The goal was to help families who were forced out of their homes and into debt to pay off their arrears by offering them new loans on better terms.
Residents of Phnom Penh worried about losing their land to a railway rehabilitation project protest in 2014 in front of the country office of the Asian Development Bank, which has funded most of the work. (Siv Channa/The Cambodia Daily) Last week, VisionFund said the project ended on June 30 after signing up fewer than 40 families. The microlender has not signed up for a second year, and the ADB appears to have no plan to replace it, leaving hundreds of evictees without aid to help them pay their loans back.
“It [was] a failed project from the beginning,” said Eang Vuthy, director of Equitable Cambodia, one of the NGOs helping the families.
Debt relief was one of the six pillars of a remedial action plan the ADB and Cambodian government put forward in 2014 to restore the evicted families’ living standards. In its second annual review of the action plan, released last month, the ADB’s Compliance Review Panel said only about 38 families had signed contracts with VisionFund and called the progress “disappointing.”
Top Sok Samphea, VisionFund Cambodia’s chief operating officer, however, disagreed with the review panel’s assessment.
“We feel that it is successful because our [customers] are very happy,” she said.
Ms. Sok Samphea initially declined to say how many families had signed contracts with the lender during the project “because the number does not look good,” but later confirmed that the panel’s figure of about 38 was “probably” right.
She said the ADB gave VisionFund a list of 200 to 300 families that might need its help, but many failed to qualify for its loans. The loans were available for amounts up to $3,000, with interest rates capped at 1.5 percent and terms of three years or less, she said. Some families either owed too much or did not earn enough.
Ms. Sok Samphea denied there was anything wrong with the project itself—even if the families were weighed down by debt because they struggled to earn money at government-designated relocation camps, where jobs are few and far between.
“Our criteria is already a discount criteria; we already go as low as we can,” she said. “We are microfinance. We are not an NGO. We cannot take all the risk.”
ADB country director Samiuela Tukuafu would not say whether the bank had plans to replace VisionFund with another lender. In an email, she said the ADB was using the Credit Union Federation of Australia, another NGO, to teach families how to manage their debts, help them raise their incomes and teach them financial literacy.
But the union is not offering low-interest loans, the way VisionFund was, and the ADB’s own review panel said in its last annual review of the remedial action plan that efforts to raise the incomes of evicted families have been about as much of a failure as the debt relief project.
Mr. Vuthy, of Equitable Cambodia, said he had met with ADB officials in May but could not get a clear answer about how they intended to cope with VisionFund’s departure.
He said any debt-relief project based on replacing bad loans with better ones was sure to fail, however, until the ADB and government came up with a reliable way of helping the families earn a decent income.
But the government has yet to act on a recommendation from the ADB’s review panel to build resettlement camps closer to where evictees can find jobs, and efforts to help them earn more money at the existing camps have yet to meet goals.
“The people cannot pay back the debt because there is not enough income,” Mr. Vuthy said. “If you cannot address the root cause of the problem, you cannot end the problem.”
Thay Ro’s family of seven was evicted from its rail-side home of 12 years to a resettlement site on the outskirts of Banteay Meanchey province’s Poipet City in 2011.
They had to sell their cows to pay for the move and were forced to exchange their rice paddy for a plot of land that only fit a small garden, leaving Mr. Ro with only his meager earnings as a moto-taxi driver. Since moving they have taken on and paid off one $3,000 loan from a microlender and taken on another.
“I used to have a lot of land for growing rice, and I was also able to make money as a moto-taxi driver and from selling the cows’ calves,” he said. “Now my family is having a hard time because I have taken a loan and we have to work hard to pay it back. If I can’t pay on time, I am fined $1 per day.”
Mr. Ro said no one ever approached him about getting help from VisionFund. He said he heard of the group from neighbors but figured it was just another microlender and shied away because of rumors of corruption.
And while it was the ADB’s money that had bankrolled the railway project that forced him out of his home, he did not blame the bank.
Mr. Ro blamed the government “because they evicted the people.”
(Additional reporting by Aun Pheap)
peter@cambodiadaily.com
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