IFC, in collaboration with the German development bank Kreditanstalt für Wiederaufbau (KfW) and the Development Bank of Austria (OeEB), created a global Microfinance Enhancement Facility (MEF) in 2009 to support microfinance institutions worldwide that may face funding shortfalls during periods of unprecedented financial stress. At the time of investment, IFC aimed to support over 100 microfinance institutions operating in more than 30 countries, including over 20 IDA countries.

In 2010, IFC established the Microfinance Initiative for Asia Debt Fund (MIFA), also with KfW and OeEB, to increase access to finance for micro-borrowers and low-income households across East Asia, South Asia, and Central Asia. The facility aimed to offer market-based debt financing, with an emphasis on local currency and longer-term financing, to microfinance institutions (MFIs), particularly those that are smaller or less developed.

In July 2024, CAO received a complaint concerning KB PRASAC Bank Plc (PRASAC), a MEF client, and LOLC Plc. (LOLC), a MEF and MIFA client. The complainant raised concerns about the harmful effects on their livelihood and well-being linked to the lending and debt collection practices of PRASAC. Additionally, due to pressure from credit officers, the complainant borrowed from informal lenders, resulting in a higher debt burden due to high interest rates, which they were unable to repay. They also claimed that food security and access to education for their children were impacted, with child labor becoming a consequence. Finally, the complainants raised that they faced threats and reprisals.

In October 2024, CAO found the complaint eligible and initiated an assessment. During the assessment, a partial agreement was reached in a joint meeting between the complainant and LOCL in December 2024. CAO will continue to monitor the implementation of this agreement until June 2025, with a possible extension. For the remaining concerns between PRASAC and the complainants, the parties agreed to engage in a voluntary CAO-facilitated dispute resolution process, and the case was transferred to CAO’s Dispute Resolution function. 

The Assessment Report is available in English and Khmer.