Street vending in Cambodia remains a crucial source of livelihood amid post-pandemic challenges. This is the third part in a series of research commentaries sharing the research observations and findings from an ethnographic study of street vendors of markets across Phnom Penh (Cambodia). This part explores the nature of economic hardships faced by vendors, including rising costs and declining incomes. The study highlights the impact of microfinancing, which often exacerbates vendors’ financial woes. Despite the intended support, many vendors struggle with debt, reflecting the need for more effective and accountable financial interventions to aid this vulnerable sector.
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Street vending in Cambodia has continuously thrived despite the multitude of challenges vendors have faced. The informal sector serves as an important source of livelihood in Cambodia’s urban spaces, and new avenues of study have broadened the understanding of the challenges street vendors face in the post-pandemic era.
To understand these ever-changing post-COVID-19 dynamics for vendors, CNES took to markets in the town of Prey Toteung and near the Phnom Penh International Airport to glean the narratives of these vendors. In our data collection, we found notable stories about vendors’ income, struggles, and steps taken to lessen the stress and strains of their circumstances, with varying levels of success. Microfinancing, emerging in Cambodia and advertised as a means for the poor to gain the means to uplift themselves, has often caused more trouble than not. This is Part III of the Cambodia Series from CNES.
An ethnographic approach was used to gather primary data, with semi-structured oral interviews using in-depth questionnaires, allowing us to gain a better understanding of people’s social, cultural, and economic contexts. The interviewee was able to control the flow of the conversation, ensuring comfort and ease in the conversation. Some findings from these interviews prove insightful in uncovering the daily realities of a Cambodian dealing with the rising cost of living, inflation, and expenditure.
The economic decline was severe in Cambodia during COVID-19. Cambodia’s GDP shrank by 3.1%, its first contraction in twenty-five years. Before this, the country had been taking steady steps towards alleviating poverty and fostering development for various sections of its society. Most families experienced an income loss, and this also meant, for many households, a reduction in necessary expenditure, like food. Post-pandemic as well, many remained unemployed and struggled to find work. This was true for street vendors, as they experienced how volatile their livelihood was, and it was worrying to many. Street vendors are often key players in tackling the income burden in their households; they contribute a significant portion of income, especially when there are children to care for.
Before and after the onset of COVID-19, living expenses in Cambodia underwent notable shifts. Pre-pandemic, the average expenditure on rent in Cambodia typically ranged from $50 to $60 per month. However, with the economic repercussions of COVID-19, rent prices experienced fluctuations, rising to $150.
The overall price of goods and services in Cambodia increased by half from 2013 to 2022. The cost of housing has increased drastically, in particular. This poses many challenges to vendors, who are not high earners and have a fluctuating, unreliable source of income. While most vendors live close to the markets at which they sell, thereby cutting on transport and living very modestly, many have faced issues with fulfilling rent requirements, even with two income earners in a household.
Photo 1: Street Vendors at Phnom Penh Airport Street Market
Basic utilities, including electricity, water, and gas, which previously cost between $15 and $30 per month, saw fluctuations in usage patterns and affordability amid changing economic circumstances and shifts in household behaviour prompted by the pandemic.
Health expenses, which were previously around $5 to $10 per month, saw changes in accessibility and affordability as healthcare systems adapted to the challenges posed by the pandemic. Transportation costs, averaging around $1 per day, also fluctuated, influenced by factors such as reduced public transport services and changes in fuel prices.
Education fees, previously approximately $2.50 per day, were significantly impacted by the closure of schools and the shift to online learning during the pandemic. This shift altered the dynamics of educational expenses, with families needing to invest in internet connectivity and technological devices for remote learning.
Mobile phone charges, typically ranging from $3 to $5 per month, remained relatively stable, although changes in usage patterns, such as increased reliance on digital communication, may have influenced spending in this area.
While there were some increases in income after the pandemic, vendors are largely yet to recover the income they previously had. Even if they have, the income has not matched rising expenses. With such tensions around the rising cost of living and inflation and worries about increasing expenses for growing families looking for upward mobility, it is unsurprising that many vendors have resorted to taking out loans from microfinance institutions.
Cambodia’s microfinance sector was envisioned as a catalyst for small business expansion, poised to uplift millions from poverty. This ambition attracted investment from European development banks and the International Finance Corporation (IFC), the private lending arm of the World Bank supplying funds critical to boosting access to credit in one of Asia’s most impoverished countries.
This development is in agreement with Cambodia’s commitment to assist street vendors, classified as “self-employed”, in obtaining public healthcare insurance and other social benefits. It is difficult for many to access these services freely and to avail them without societal prejudice. There are still notions and claims of urban superiority levelled against those vendors who hail from rural areas; this is especially so given recent rapid urban planning and development. These notions, along with stories of failure and redundant bureaucracy, make street vendors themselves wary of such schemes and aid, though they recognize the benefit of government support. There is a general lack of trust between policymakers and vendors, exacerbated by issues with lending.
Photo 2: Street Vendors at Phnom Penh Airport Street Market
Recent events have cast a shadow over Cambodia’s microlenders, with reports emerging of borrower suicides due to overwhelming debt burdens and families being compelled to liquidate their land or compel school-age children into labour to settle off crippling debt. Many are left vulnerable and in debt to the microfinance institutions that were intended to help them due to poor practices, lack of accountability in institutions, and unawareness of legal and financial practices among street vendors.
Among the twenty-five interviewees, sixteen had resorted to borrowing or taking out loans, while one individual, due to her meagre income, found herself unable to secure a loan. This is indicative of a larger trend seen in Cambodia of vendors taking loans to pay daily expenses, particularly families with children. The average loan duration stood at 3.4 years, ranging from a minimum of two years to a maximum of seven years. In most cases, borrowers sought financial assistance from microfinance banks, closely followed by AMK. On average, borrowers were indebted to the tune of $8,900. Monthly repayment obligations varied across institutions, averaging $100–$150 for AMK, $200 for Sathapana Bank, and approximately $75 for microfinance banks.
The primary apprehension among borrowers revolved around loan repayments, exacerbated by post-pandemic economic challenges that witnessed escalating costs alongside dwindling income streams. Many expressed genuine concerns regarding their ability to honour their debt obligations. Essential expenses such as children’s education fees, healthcare needs, and material costs dominated their financial landscape. Additionally, for food vendors, the risk of perishable goods spoiling and subsequent losses due to diminished consumer demand further compounded their financial woes.
Microfinance institutions have displayed a lack of accountability and efficiency, which has harmed vendors. Microfinance lenders give loans for expenses that are not income-generating, such as housing or repayment of other loans. Alongside the malice street vendors can face, Cambodia has seen issues of credit officers persistently using intimidation and scare tactics to pressure vendors into paying their debts. Many vendors find themselves in debt traps, taking out loan after loan to pay off mounting debts. As seen in our interviews, the debt-related stress follows people into their personal lives. Borrowers must be protected; while the loans have helped many, others face significant difficulties and find themselves feeling worse off. The microfinance industry is in such dire straits that multiple investigations are being conducted.
The street vendors we spoke to all noted rising costs and difficulties in fulfilling payments, either due to a lack of sufficient revenue or an increase in necessary expenditure. Vendors have resorted to taking out loans from microfinance institutions, some of which have left them destitute and worse off. Overall, the economic landscape of Cambodia has experienced significant transformations pre- and post-COVID-19, impacting various aspects of daily expenses and necessitating adjustments in budgeting and financial planning for individuals and households.
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* Banner photo from author.
*The views expressed in the blog are those of the author alone. They do not reflect the position of the Saw Swee Hock Southeast Asia Centre, nor that of the London School of Economics and Political Science.
