Trapped between unscrupulous microfinance companies and deceptive governments, rural women farmers in Sri Lanka are drowning in debt. More than 200 have committed suicide, some with their young children; families have been destroyed and hard-earned assets lost as they struggle to meet the impossible demands of large corporations to increase their profit margins.
With the emergence of unregulated microfinance at the end of the 2000s, there are 2.8 million borrowers, including 2.4 million are women. Interest paid varies from 28% to 89%.
“In general, microcredit loans are based on the idea that providing access to credit will help women and, therefore, their families, to lift themselves out of poverty. Microcredit helps women set up a microenterprise, the income of which is supposed to meet the consumption, education and health needs of their family members, especially children. But these fundamentals are being eroded in the face of strong competition between lenders to reach the same pool of borrowers, ”according to an in-depth study on microfinance and its effects on women conducted by the Poverty Analysis Center in 2019.
“With only a few documents to submit and little cross-checking to verify the client’s borrowing history, women can access loans at extremely short notice – sometimes less than three days for women who are not a first-time borrower. times. Information about the forms they sign and the deductions made are not available in many cases. In addition, the forms are not always in their native language, which makes it difficult for them to understand the basic terms of the credit facility, ”the study said, adding that if the women knew the payment schedule, they would not. could not indicate the interest rate applied. by microfinance companies.
Such poor financial literacy along with many other factors has caused many women, especially women farmers, to be unable to repay their loans and fall into desperate financial hardship.
Pushed to the wall, a group of women farmers from Polonnaruwa has been organizing a continuous protest in Hingurakgoda since March 8. The protest site they chose is a memorial erected by President Ranasinghe Premadasa in 1986 after one of his village awareness programs featuring statues of kings. and queens including King Parakramabahu whose magnificent reservoir, the Parakrama Samudra, was built to bring prosperity to his people by providing water for agriculture. Today, his descendants are plunged into poverty and are struggling to survive.
Women have proven to be a fiery bunch, pushing back microfinance firms that try to cheat them and take advantage of their low level of financial literacy. They are hard working and principled and went out of their way to repay as much as they could. Some fell ill or were unable to weather droughts and floods while others were forced to pay exorbitant interest rates.
They identify the exact day of the rot – July 22, 2018 – when, at a meeting in Jaffna, then Prime Minister Ranil Wickremesinghe and his finance minister Mangala Samaraweera announced that all microfinance debts will be wiped out and called on borrowers to stop repaying their loans. Mr Samaraweera said interest rates would be capped at 30%. Many women have done just that, only to have huge amounts owed, as well as penalties, down the road. During the election campaign, President Gotabaya Rajapaksa made the same promise but to no avail. Nothing has been done to erase their debt burden; even the brief respite granted during the lockdown linked to the Covid-19 pandemic came back to haunt them with accumulated sums to be repaid immediately. Many are indebted to several microfinance companies after taking out a second loan to repay the first and a third loan to repay the second. They are inundated with demand letters and some companies have filed for the women to pay.
Debt collectors, often young men, come into houses at 6 a.m. and sit there all day. Sometimes it’s just the wife at home with the husband at work. The neighbors argue and the husband becomes suspicious, which creates tension in the house. Some women have pledged their jewelry, electrical appliances and other household items to meet repayments. One said the hairs on her arms stood on end when she heard a motorbike go by. Others tell their kids to lie and say they’re not home when they head for the back door or hide inside, reluctant to come out in case they run into. the formidable collector of debts.
Studies have shown that women go to great lengths to repay their loans; it is a matter of honor for them unlike men who often use the money for drinking and gambling and cannot fulfill their obligations. Women farmers used their loans on workers’ wages, fertilizers and other agricultural inputs; it costs around Rs. 50,000 to cultivate an acre of land. The women of Polonnaruwa did not buy consumer goods or waste the money on celebrations, as some financial firms suggest. Some have taken on other jobs such as sewing clothes or preparing food, but once again the pandemic has added to their woes.
There are four MPs for Polonnaruwa district but none of them cares about the fate of their constituents. They regularly walk the road in front of the site in their large vehicles but do not stop to offer a solution or assistance.
Fed up with their plight, the women are determined to continue the protest until their demands are met. These include writing off all debts, stopping debt collection until a debt audit is performed, and dropping legal proceedings.
“It’s like cancer that spreads across the country,” explains Priyanthika Kumari, the leader of the Collective of Women Victims of Microfinance. His family has mortgaged everything they have to pay off their loans. “There is no end to paying these loans. Government banks only give money to big business, not to us. They ask for documents that we do not have and we must have a regular job.
“This government made false promises during an election to get our votes by saying it would write off our debt. President Gotabaya’s election promise was just a promise. Lives of innocent women are lost when company people enter villages and ruin people with lies and false information. They say we buy electrical appliances and have parties with the money, but I only used it to cultivate my fields, ”she says.
Anusha Damayanthi claims that interest is calculated arbitrarily. She was told it would be 18%, but she paid 26%. With a penalty for non-payment during Covid-19 and interest on funds, including the penalty, the amount to be repaid has reached an unimaginable level. “I had to be in Colombo for a year to take care of my sick husband who was in the navy and suffered from a war wound. I have started sewing work but now there are no more orders. I have three daughters under the age of 18 and no way to pay for their education.
“We live in a rented house. We don’t have our own land. I have no way of repaying what I owe. I had to take out a second loan to pay off the first. The company took legal action against me and sent me a summons, ”she said.
Janaki Sriyakanthi is determined to continue satyagraha until the debt is cleared for everyone. “This government made false promises to us. We paid off our loans until the previous government told us to stop, even if we paid them off somehow. Now we are in trouble because the amount accumulated is so high. How can we pay? The companies are making big profits, so until we have a solution, we won’t stop, ”she said.
The women do not want one-off measures like private money, but are determined to get a definitive solution to the microfinance debt problem facing women across the country.
Below are excerpts from interviews with the victims:
Priyanthika Kumari of the Collective of Women Victims of Microfinance talks about the burden and consequences of microfinance debt on women, including the increase in suicide cases among women. Watch the full video below.
Janaki believes that protesting is the only way to bring attention to the plight they are facing. “It is not the victims but the authorities whoo will resort to violence, ”says K. Jayatissa, a community leader. Watch the full video below.