BY The Collective of Women Affected by Microfinance
The Government that came into power pledging to abolish all microfinance debt has failed to keep its promises. Moreover, the Government has also been unsuccessful in making a sufficient intervention to facilitate women who are suffering from an escalated microfinance crisis in the backdrop of the Covid-19 pandemic.
In a context where the standards of living of all the people affected by microfinance have been deteriorating, the Collective of Women Affected by Microfinance called for a satyagraha (a form of protest) on Tuesday (8), in order to raise awareness about the gravity of the problem and to caution the larger society of the new dangers to come. Again, the Government failed to respond to the demands of the Collective during the satyagraha which lasted for 55 days in front of the State monument in Hingurakgoda, Polonnaruwa.
As the national Collective of Women Affected by Microfinance, we convey our displeasure and opposition to the Government for safeguarding the microfinance companies responsible for our financial catastrophe while misleading the women and all the people affected by the microfinance crisis.
We have been illustrating how all Governments hitherto have facilitated the finance companies to profit from the livelihoods and labour issues of women, instead of addressing these problems through a national economic development plan. Unpayable debt dumped on the women and their families bear witness to the failure of the Government policy.
We have been raising consciousness on the nexus between our livelihoods, suicides, dispossession, displacement, domestic violence, family disputes and the problem of over indebtedness for over half a decade since 2017. We have communicated to the Government, the Central Bank, the Finance Ministry, key political leaders in the Government as well as the public, repeatedly on this matter.
However, the political leadership, as well as the policymakers, appear to be deaf and blind as they believe that new loan schemes would solve the current microfinance crisis. They have discarded our lived experiences, the confirmation of the failure of debt driven entrepreneurship and self employment. We will not fall from the frying pan into the fire by following the failed Government policy of debt-driven entrepreneurship and self employment.
The loss of income and the increase in the cost of living triggered by the economic crisis that the country is facing as well as the crisis in agriculture at present, have precluded the ability of indebted women to pay back their debt.
Concerns arising from the current context
- Persistent collection of debt drives women to danger
- Microfinance borrowers engaged in livelihoods related to agriculture, fisheries and the informal economy do not enjoy guaranteed wages or retirement benefits. Hence, they are more susceptible to climate change, economic instability, sickness, and accidents. The Covid-19 pandemic illustrates many incidents where women were forced into more hazardous forms of debt as they failed to meet debt repayment owing to the collapse of their regular sources of income.
- Female borrowers of microfinance record incidents of losing their savings, household goods, gold, and land in the process of debt repayment.
- Women often succumb to domestic violence arising from household disputes as they prioritise debt repayment over other household expenses related to food, education, and health care.
- A 2018 report by the Independent Expert on Foreign Debt and Human Rights to the United Nations Human Rights Council Juan Pablo Bohoslavskiy documented that 2.4 million out of the 2.8 million ensnared in the microfinance debt trap were females.
- News reports over the years as well as national suicide records with the Police Department account for over 200 suicides related to microfinance.
- Litigation against females failing to repay
- Finance companies and microfinance companies have been misusing the judicial mechanism to coerce females to repay unpayable debt.
- Some companies are threatening females in remote areas with litigation in courts in Colombo.
- Most of the borrowers cannot bear lawyers’ fees. Many cannot afford to travel to appear in courts. As a result, microfinance victims do not get a just hearing or legal representation. Almost all the cases are determined so that they are favourable to the finance companies.
- Permanent financial disenfranchisement
- Borrowers unable to repay are delisted in the Credit Information Bureau (CRIB) which bars them from accessing other financial sources in the formal financial sector.
- A majority of the microfinance borrowers listed in the CRIB are excluded from accessing financial concessions provided in line with the Covid-19 pandemic.
- Denying microfinance borrowers access to formal financial markets directly exposes them to precarious forms of finance in the informal market.
- Pressure to repay debt compels females into antisocial activities
- In many villages, the lack of income generating opportunities has pushed females into prostitution.
- The debt burden has negatively affected the children’s education and the psychological well-being of the family.