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8 Dec 2022

LICADHO & others

Cambodia: Eight local & international NGOs decry Asian Infrastructure Investment Bank’s approval of loans to microfinance institutions with alleged human rights violations

"AIIB Loans to Cambodian Microlenders Risk Worsening a Human Rights Crisis", 17 November 2022

… civil society organisations in Southeast Asia and Europe, decry the Asian Infrastructure Investment Bank’s (AIIB) approval of US$175 million in financing to Cambodian microfinance institutions, despite years of widespread public reporting on human rights violations in the sector.

AIIB, a multilateral investment bank with 105 members including Germany which holds significant shares, chose to begin financing two Cambodian microlenders the same month that the IFC’s Compliance Advisor Ombudsman accepted a complaint alleging that the IFC’s investments in those same microlenders and others are linked to predatory lending and abusive collection practices…

It is disappointing that the AIIB chose to begin investing in Cambodia’s microlending sector at a time of heightened scrutiny, as credible reports from CSOs, journalists and investor-funded research has found widespread land dispossession, loss of livelihood, health impacts, loss of land belonging to Indigenous Peoples, food insecurity, and child labour….

A recent study commissioned by the German Ministry for Economic Cooperation and Development (BMZ) substantiated years of reporting from civil society groups in Cambodia, finding that the country’s microfinance sector has resulted in an “alarmingly high” and “unacceptable” number of debt-driven land sales, at the astonishing rate of one land sale every 16 minutes for the last five years.

… The approval of these projects shows a clear failure of AIIB’s due diligence. These concerns were raised to the AIIB during its annual meeting by various civil society organisations, yet there has been no public, substantive response from management regarding how it will proactively address these problems…