This article is based on a true story, that the Sunday Times reported on 04/03/2018 under the heading of Northern Village women in claws of microfinance monster.
The story is about northern villagers which have become victims of predatory lending of private financial institutions. These villages are coming out of a 30 year old civil war with massive damages to their lives. Now they are trying finding their feet in newly find freedom. Important thing is they have managed to protect their family wealth during the civil war now being taken by financial companies without a bullet being fired. They are paying their unplayable debts, not only by losing their properties but also killing themselves.
People in the North have protested and alarmed the authorities without much success. As we all know, It is quite common for the government to come up with price controls. Our gas, oil, medicine and even milk powder is sold at a controlled price by the government which are generally supplied by monopolies. Further government has gone to the extent to control the prices of soft commodities which are supplied by multiple suppliers such as rice, sugar, dhal etc.., which is very hard to execute.
I wonder why the government has not taken the same step when it comes to credit creation and or lending by private financial institutions. In fact central bank can overnight stop this calamity by putting a cap on interest charged. Unlike other products, credit creation and or lending can be easily monitored and restricted by central bank since financial institutions are governed by central bank.
In contrast central bank has taken steps to put cap on savings while taking the Hippocratic step of removing cap on lending. Publically demonstrating there is no policy but it is just another scam to help wealthy to become wealthier at the expense of the society.
It does not have to be this way. Government can easily step in putting an end to the extortion and making policies favoring voters not the campaign contributors. This is not the Karma of people. This is a systematic way of extracting wealth of masses to few individuals or families while destroying the real economy and society.
Further government can easily recover the wealth looted from the people introducing policies such as increasing taxes on financial institution, nationalizing credit creation and debt cancelation. In contrast our government has shifted the tax burden to common man further eroding the spending power of the majority.
Financial parasitism is not limited to North and East. Entire country is in the process of becoming victimizing regardless a race or a religion. Continues declining of consumption over last five years and rising private debt levels raises alarm bells of the gravity of the indebtedness of the society. Massive amounts of earnings goes to debt servicing leaving the people very little to consume. As a society some body’s expense creates another person’s income. In other words declining consumption creates declining income for the society. Private debt deflation has already started in Sri Lanka that is evident by 3% growth in our GDP last year.
First quarter results of this year further indicate that the trend intact has accelerated. Growth in share market in first quarter is purely based on the impressive results of the financial sector. Clearly indicates how financial parasites are killing the real economy. Financial parasites are detrimental to the society. It destroys the real economy which produces the goods and services extracting money out of it leaving nothing for economy to survive. We live in an economy, where debt is the key ingredient to operate. Weather people like it or not they have to get in to these one sided contracts with these financial monopolies. Nothing is changeable for the customer without being penalized. In contrast monopoly credit supplier can change anything at their will. It will not stop just destroying the economy. It will disable the society ruining families and dehumanizing the human beings.
It is surprising to see religious leaders raise no voice against the exploitation of financial raiders. One of the key fundamentals of the religions is defending the week. In country with a proud religious history week is getting annihilated. Throughout the human history, religions have fort hard against usury, debt bondage and well being of the society. I hope and pray at least religious leaders will do their part representing people in Sri Lanka.
By
Gayantha Dehiwatte
Entrepreneur and Socialist Advocate