How Microfinance Failed the World's Poor

Microfinance, once hailed as a capitalist solution to global poverty, has largely failed to deliver on its promise of empowering the world's most vulnerable. Originally designed to provide small, accessible loans for entrepreneurial growth, the industry has shifted toward aggressive commercialization, often resulting in predatory interest rates and systemic debt traps. In Cambodia, this crisis is particularly acute, as farmers like Promtor and Samrit Saraw face the loss of their land and extreme financial hardship due to unmanageable loan burdens. Despite the initial vision of a poverty-free world, data suggests that microfinance has not significantly improved livelihoods and, in many instances, has exacerbated the struggles of those it intended to help. The International Finance Corporation’s failure to provide adequate oversight further highlights the disconnect between the industry's social mission and the harsh reality faced by borrowers on the ground.