Skip to main content
KBS_Icon_questionmark link-ico
Washing hangs in a Cambodian brick factory ;

Unpacking microfinance as a driver of 'modern slavery' in Cambodia's brick sector

Dr Nithya Natarajan

Lecturer in International Development

26 October 2020

This blog is based on an article co-authored by Dr Nithya Natarajan (KCL), Professor Katherine Brickell, and Dr Laurie Parsons (both Royal Holloway).

The term ‘modern slavery’ has risen in prominence in international development thinking and policymaking in recent decades. Defined by Antislavery International, a leading NGO in this field, as ‘the severe exploitation of other people for personal or commercial gain’, the issue has rapidly become discursively framed a ‘significant global problem’ to be solved according to O’Connell Davidson, with the burgeoning of a global network of non-governmental organizations and multilateral institutional commitments centered on eradicating ‘modern slavery’.

The most common understanding of ‘modern slavery’ within this ‘new abolitionist’ industrial complex depicts a relationship between a highly exploitative employer/creditor and a vulnerable victim. For example, the description from ‘Free the Slaves’, another leading NGO in this field, states: ‘People borrowing money in an emergency are cheated by thugs who force their entire family to work as slaves and never admit the debt has been repaid’.

Yet, though popular, this conceptualisation is problematic. It insulates specific instances of debt bondage from the wider workings of the labour market, construing instances of modern slavery as exceptional, and driven by one-off, criminal employers. The danger of this conceptualisation is that it obscures the systemic nature of modern slavery. Research from the Cambodian brick sector tells a different to those painted in mainstream NGO literature. The ESRC-FCDO-funded ‘Blood Bricks’ research project, highlights how a key driver of debt bondage or modern slavery in brick kilns is the taking of unsustainable microfinance loans, and the concurrent decision of indebted people to swap debts for debt bondage.

A brick kiln

The project traced the journeys of Cambodian brick workers, from rural villages into debt bondage in Phnom Penh brick kilns. Firstly, surveys and interviews in three villages with high levels of out-migration to kilns revealed how those households with higher debts were most likely to end up on brick kilns. Households where one or more member ended up on a brick kiln held an average of US $1380.93 of debt, where those without family members on kilns held an average of US $814.72 of debt.

To put that in context, Gross National Income per Capita in Cambodia in 2018 was US $1,380, so debt levels among kiln-sending households were remarkably high.

Interviews repeatedly revealed that contrary to depictions of coercive employers or violent middlemen, highly-indebted households chose to swap their debts for a debt bond. They approached brick kiln owners, often knowing where to turn because others from the same village were already working in a particular kiln, and asked them for a single loan. This loan would wipe out all the existing debts, and require that whole families move to the brick kiln to work and pay off their debt-bond over years.

Secondly, households were highly indebted largely due to a predatory microfinance industry. Data across the three study villages revealed that 93.3% of all debts were to microfinance institutions (MFIs). Microfinance, pioneered in the late 1980s and Bangladesh, advocates the dissemination of small-scale credit to drive entrepreneurial activity among those that would not qualify for formal bank loans.

Woman packs blood bricks

All of this takes place in the context of rapid financialisation. Cambodia has seen a meteoric rise in its microfinance sector, which has transformed from a not-for-profit, state-run scheme, to a large-scale commercial sector, enabling commercial banks to reap high profits. As of 2019, over 2.6 million Cambodians held over US $10 billion in microloans, with an average loan coming to US $3,408; the highest averages of any country in the world.

The sector’s commercial orientation has been accompanied by an expansion in lending: a rise in loan amounts and interest rates, and a loosening of restrictions for accessing loans. This means that poorer households, with less collateral and more to lose, are being drawn into what Ananya Roy has termed a form of ‘poverty capital’ – wealth creation on the backs of the poorest.

For villagers Phala and his wife Neary, despite not having any agricultural land, they were able to access a MFI loan from Acleda using the small patch of land on which their house sits as collateral. However the stakes are high. As Phaly indicated, ‘If we use the house as collateral and we do not pay back our loan to Acleda, Acleda will take our house and sell it at auction at a minimum price’. This acts as a form of discipline on Phaly and Naery to repay their loan, as default risks their home being taken away – the basis for their natal ties to their village, and the location of their everyday reproduction and regeneration.

Children on a brick building site

The expansion of MFI to poorest also comes at a time when the impacts of an increasingly varied climate, combined with reduced state support, and rising agricultural costs, are making rural life untenable for many across Cambodia. Mealea and her parents took on a loan to invest in paddy cultivation, using their homestead land as collateral. The shift to more commercial rice production across Cambodia has meant higher costs for pesticides, fertilisers, and irrigation to ensure success for high-yielding seeds. However, floods and poor land topography meant that Mealea’s crop failed, and she and her family were unable to repay their loan. Mealea therefore approached a brick kiln owner, and asked him to repay her existing debts. In exchange, she moved to the kiln to work off her debt bond.

For Mealea, the kiln owner was a paternalistic figure who enabled her to escape rising MFI debts and keep hold of her homestead land. She says of her new work, ‘Everyone works normally without pressure’.

Life on Cambodia’s brick kilns is not easy. Kiln work is unsafe, workers are paid low, piece-rate wages, and adults and sometimes children undertake gruelling work for long hours with minimal protective equipment. Health issues reported include breathing difficulties, limb loss due to machinery, dizziness, and even unexplained deaths. Furthermore, kiln workers are often unable to leave kilns until debts are repaid, which can mean living on them for years and over generations.

Yet for many, highly-exploitative bondage is the only choice, due to spiralling MFI debts. The development sector therefore needs to look beyond exploitative employers to understand how debt bondage is forged. It also needs to reconsider the uncritical promotion of microfinance as a tool of poverty alleviation, across the Sustainable Development Goals and beyond. In its current commercial form, MFI risks being a drain on people’s finances, and even a driver of debt bondage.

Moving beyond ‘modern slavery’ then, we need to re-situate highly exploitative labour relations in a wider setting. One which understands how debt bondage is driven by systemic factors, not one-off instances of exploitative employers.

 

The researchers behind this study intend to submit a petition to the UN in order to expose abuses of both investors and officials who have profited from debt bondage. Their goal is to ensure that brick workers receive fair wages, good working conditions, and ideally compensation for past exploitation. Find out how you can help

 

All images featured in this story were taken by Thomas Cristofoletti, Ruom collective, © Royal Holloway, University of London

In this story

Nithya Natarajan

Nithya Natarajan

Lecturer in International Development

Latest news