M. Champa Irangani is in no mood to celebrate ‘Avurudu’, or New Year, the biggest annual festival that Sri Lanka’s majority Sinhalese community observes mid-April, while Tamils celebrate the Tamil New Year around the same time.

“The New Year will dawn only the day our debts are cancelled. Until then we cannot celebrate. Surely not, when so many women have died by suicide under the pressure of microfinance loans,” she says, seated with dozens of affected women who have been observing a ‘satyagraha’ off the main road in Hingurakgoda town, in Sri Lanka’s Polonnaruwa district, for a month now.

Seeking relief

They want their microfinance debt abolished, and an alternative source of credit that will free them from poverty, rather than worsen it. Their experience, shared by tens of thousands who have taken microfinance loans in Sri Lanka, not only counters popular claims in South Asia of microcredit alleviating poverty and empowering women, but also highlights the devastating consequences of the individualised, high-interest microfinance loans, entangling women in a pile of debt.

Ms. Irangani feels especially let down since there has been no relief in over a year after President Gotabaya Rajapaksa, whom she voted for, came to power pledging — among other things — to abolish their loans.

Their ongoing protest is the latest against the Rajapaksa government — after the farmers’ agitations in the southern Hambantota district — from among those who backed their party in the 2019 and 2020 polls.

President Rajapaksa’s astute election campaign in 2019 had two main thrusts – enhancing national security, on the heels of the Easter terror bombings that April, and improving rural livelihoods to develop the country. His poll manifesto ‘Vistas of Prosperity and Splendour’, which has since graduated to a national policy framework, promised to “ensure relief of village women falling victim from unregulated micro finance schemes”, instead offering “government-sponsored concessionary loan schemes and agricultural loans”.

Ms. Irangani had reason to be hopeful. “I went all out and canvassed for their candidate in the general elections [August 2020] too, asking women in my village to back their party so our fate might change, but here we are, hearing of more and more indebted women dying by suicide [nearly 200 women, according estimates]. They simply don’t care.” The government has spoken of possible low interest loans as alternatives, but the women are not convinced yet.

Drawing a circle in the air, she says: “Livelihoods have become a big zero”. If the pandemic severely affected the country’s economy — with external sector earnings dropping sharply, foreign reserves draining, and the Sri Lankan rupee plummeting to 203 against the U.S. dollar — daily-waged agriculture labourers like her, who were already reeling under debt, were in for even harder times, amid growing joblessness, falling wages and uncertainty.

Ms. Irangani’s “debt trap” began when she returned to Sri Lanka some years ago, after working as a domestic help in West Asia for seven years. Exhausting her meagre savings in an unexpected court battle, she resorted to a loan to survive, and soon, one loan led to another, as companies relentlessly sold easy loans at her doorstep. The lending companies had done the same with war-affected Tamil women in the north and east, who were struggling to rebuild their lives and livelihoods with little state support.

Exorbitant interest rates

“Banks refused to give loans without any collateral security. Many families had no steady income or big lands to cultivate. At a time when children in our village were going hungry, these microfinance companies offered money,” says Priyanthika Kumari, who heads the Collective of Women Affected by Micro Finance from a cluster of more than 60 villages in the district. “There are some 1,02,000 women in Polonnaruwa district who have taken such loans.”

The women paid exorbitant interest rates – 40 % to over 200 % — amid harassment from collection agents. They signed up for more loans to cope, to ensure their families can afford two decent meals. But despite regular repayments, their principal loans amounts remained undiminished, and their impoverished lives, unchanged.

When they realised that their exhausting labour was never going to be enough in the face of their mounting debt, they took to the streets, much like their Tamil counterparts who repeatedly agitated during the last five years, demanding a solution to the crisis.

In fact, it was their persistent calls that pressured the former Maithripala Sirisena-Ranil Wickremesinghe government to announce some targeted relief measures through the Central Bank in late 2018. Acknowledging the predatory nature of microfinance loans, the administration announced greater regulation, an interest rate cap on microfinance loans, a moratorium, and cheaper credit alternatives. But the measures proved too little, too late.

“It all sounded like a dream at that time, but eventually turned out to be a mirage,” Ms. Irangani recalls. The then incumbent government did not see through the measures announced in its last leg in power.

That is when President Rajapaksa made the promise, renewing the hopes of affected women. As that hope fades now, the women seated off the main road in Hingurakgoda say that if the government does not meet to their demands by the end of the month, they will launch a “fast unto death”. “We want to raise this issue nationally. We cannot afford to lose this struggle, we will not give up,” Ms. Priyanthika Kumari says.

Meera Srinivasan

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