14 August, 2018

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Ministerial Response To Micro-Financed Suicides

By Ameer Ali

Dr. Ameer Ali

Minister Mangala Samaraweera’s “inherent moral responsibility” to assist struggling debtors, who are principally women, though commendable yet does not go far enough to tackle the main cause of indebtedness. His official observations need be elaborated to emphasise the gravity of the problem. Among the 75,000 women across 12 districts the vast majority are Tamils in the North and East. This is clear evidence that post war rebuilding of these districts has not really rehabilitated war affected families and tackled the underlying poverty and distress of war widows. It is almost a decade since the war ended and a victorious president proudly declared in 2009 that there would be no more Sinhalese or Tamils in the future but only Sri Lankans. Why then are these victimised Sri Lankan women left to become victims again, but this time in the hands of the microfinance companies, and driven to commit suicide? Will the write off of debts to the value of Rs. 100,000 or less solve the fundamental problem of poverty, which of course is not confined to Tamils only? The minister’s is a one off band aid solution and does not guarantee recurrence of debt-driven suicides. 

The government’s resolve to tighten the operation of finance companies is admirable, but the cap on interest rate at 35% needs serious reconsideration. It is far too high to borrowers of small scale non-consumption loans. Low fixed term interest over longer period of repayment for small loans should be the way to go about. Finance companies already earn huge profits from large scale business and riskier loans, and they can easily afford to charge low interest on small loans. These loans also should be part of a wider poverty alleviation program in which local councils should be induced to get involved. Small and medium scale income generating projects based on local resources should be developed by local and provincial councils, which should be generously funded by the government. If it wants to attack the systemic poverty resulting from an unrestrained open market then rural based poverty alleviation programs are a must. Sri Lanka still has a large rural sector that needs be developed with involvement of its residents. It is a tragedy that such programs have been neglected and gone out of government attention in the interest of large scale private enterprise, foreign investment and mega projects. Urban poverty is another area that needs a different set of solutions.

Of what use is economic growth if benefits of that growth do not reach people at the bottom layers of society? Suicides are a symptom of the failure of such growth. Take care of the people and GDP will take care of itself. China uplifted hundreds of millions of its citizens above poverty line not through the so called trickle-down effect of the market but through active state intervention.    

The debt-driven suicides in Tamil areas is also the reason why at  least one Tamil state minster got frustrated at her impotency to do anything while in government and burst out with a politically unpalatable statement of returning to the rebel days. There is nothing to get alarmed and angry about such outburst because it happens everywhere when governments neglect the welfare of its citizens. When for example, Mikhail Gorbachev renounced communism and embraced the Chicago model of capitalism he ended up creating a kleptocracy in Russia, and common people there were so frustrated they wished the return of Joseph Stalin. Also, without no end to the continuing oppression by Israel aren’t some Palestinians wishing for the return of Hitler? These are natural human qualities that need be understood within the relevant context.                            

What is needed now to prevent unwanted suicides is a series of people oriented small and medium scale development projects funded by the government and supervised by local and regional councils not only in Tamil areas but in every district to help out struggling women and their families. These struggling families also need free medical help and moral advice to give them hope in life and prevent them from resorting to desperate measures.  

*Dr. Ameer Ali, School of Business and Governance, Murdoch University, Western Australia

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    This comment was removed by a moderator because it didn’t abide by our Comment policy.For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2/

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    I suspect that the ‘microfinanciers’ who offer loans to ordinary trusting/gullible/desperate villagers, do not allow the full contract with interest rates and conditions, to be read and understood by the borrowers. If the loan is on compound interest, the repayment will build up to a massive amount within a short period.
    They probably are being asked to sign papers which do not have details entered correctly, or not entered at all, on ‘trust’.
    Thus, the borrowers become liable to massive repayment within a short period, which they cannot fulfil.
    A social service organisation/lawyers should offer its/their services to those who require financing.and/or are liable for repayment.

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    Aameer Ali seems to be misconceived. Micro finance debt among Sinhala women is far worse than Tamils. Just go to Panadura, Waadduwa, Kaluthara areas and see.

    In Sri Lanka most suicide victims are Sinhala male farmers. They are the Rajarata Govi Puthras.

    Just talk the reality Professor rather than talking the irrelevant.

    Thank you.

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      What about this breaking news today ;
      A Buddha aamaduru who duped around 15 crores ( 150 million ) of rupees in the name of helping them to get visa to Canada.The police claim that the aamaduru who was staying in the Akunanga Vihara has cheated by taking money from the people in Agungala, Bandarawela, Kandy, Wellawaya, Badulla, Weligama and Pallekela.

      One of the men who worked as a driver of this horu aamaduru was detained while the horu aamaduru had gone absconded with money..
      Worst then micro loan ? ..?

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    Dr Ameer Ali
    Excellent piece of advice. Simple or medium range business ventures are most welcome up and down the country. There are far too many single parent families due to war , and employment migration.

    Beware the vultures are always there in the form of Politicians, their families and friends to claim the Lion shares of these ventures.
    They wouldn’t give a damn about the plight of these single women and their children.
    They will let them rot or not allowing them to get any profits in these ventures.
    It will be only the mouth to mouth existence as a result, nothing more.

    Who gets the Lions share ?? the Looters of the Parliament of course.

    Who will be losing out in the end??? Certainly these poor women and state wealth are there for these swindlers to be used and abused.
    There are no honest individuals who can be trusted with any projects.

    Poor Srilanka and its people.
    There’s no way any one can be trusted for sure.
    Greedy lots , of which I’m ashamed to call myself a Srilankan.
    Priority for these Looters are theirs and their families luxury lives.
    Don’t give a damn for the poor.
    How about a luxurious showcase Daneh! for the rich and spoilt Mahanayakas who lives in Luxurious temples, embedded with gold leaf walls and ceilings adorn to express their wealth.
    Shame, Shame, more Shame actually when the beggars outside these luxurious worshipping places cry for food and a roof to lie down.
    This is Srilanka, Apeh Aanduwe with so called not milk and honey but with greed and selfishness adorned with gold plated cars and houses.
    ShitLanka.

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    Mrs Udubadewa
    Please don’t twists the truths.
    There are far worse situation in war torn areas, the destruction was caused by the Srilankan forces in the name of war inside a country against its Minorities.
    Even the invading Forces would not have caused this kind of massive destruction when they invade.
    This was a war against the Minorities to annihilate the minorities.
    The only difference now that we are living in a global village with electronic media watching every move of the wretched war mongers and the war criminals activities.
    What ever happened during , Cholas, Paandias, Dutugemunus, eras we’re thing of the Past.
    SL is tarnished with their deliberate acts of human rights violations forever.
    Twice a year of proving / disproving of innocence to the UN is another disgrace to the country.
    What more do we need. There are proofs of the evil nature of the war and how the minorities are marginalised , stripped of devolopements in these areas which resulted in this destruction with the help of some of the super powers is fully evident, thus resulting poverty.
    The majority and the majority government DID NOT allow the Minorities lives to improve or live in peace.
    That’s again Against Lord Buddhas Sermons.
    Let live and others Live , hating enemies is not one.

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      Analyst
      Tamils fought a war against the state or the other way round? LTTE is a Tamil organisation which earned the infamous title of the most ruthless terrorist outfit ever. Their level of cruelty is beyond comprehension leaving the much publicised ISIS acts of terror look child’s play. They derived their strength from Tamil Nadu, finances and arms supply from diaspora and all Tamils within the island who encouraged them to be continually engaged in most inhuman acts of violence such as ripping off pregnant Sinhala women. You elevated them to the pedestal of ‘sole representatives’. People like you were the support backbone. You have not stopped your false, vicious propaganda which only devil can invent. You are doing the greatest disservice to those Tamils who are struggling to recuperate, having released from being held hostage as a human shield. People like you never wanted any peaceful coexistence between the Sinhalese and Tamils to take root. Always raking mud and poisoning the hearts of Tamils. Always ensuring that Sinhalese are kept on the boil. Give your devilish heart a rest. Give us an opportunity to move forward together. Take a break. There is a long way from Nandikadal to Vadukkodai Mr Analyst.
      Soma

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    “Also, without no end to the continuing oppression by Israel aren’t some Palestinians wishing for the return of Hitler?”

    Gota was advised by a Buddhist monk to rule like Hitler, if he is elected to be the next President of Mother Lanakwe?

    why do Sinhala people need a Hitler?

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    Dr. Ameer Ali. YOu taught in the Commerce sector I suppose. I think you together with the misleading titles be trivialized the ddepth of the suicides. 35% is even more than credit card rates. How do you expect the borrower to earn money or any returns when the loans was evern higher than the credit card rates.A DECENT GOVT WOULD PROSECUTE MINISTER AND ALL THE OFFICLAS INVOLVED AND RIGHT NOWE THEY SHOULD BAN THOSE COMPANEIS DOING BUSNESS. THEY MUST LET LOOSE THOSE BORROWERS THEY SHOULD ASK COMPHEN SATION FOR THE MAYHEM.

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    One aspect of the debt crisis is consumerism, which is haunting post-war Jaffna.
    Salespersons of semi-luxury commodities, banks and other lending institutions rushed into the Jaffna Peninsula.
    *
    Our problems are fundamental and cannot be fixed by tightening one screw here and loosening another there.

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      Could you connect that to Mangala paying full amount of loan & 200%, 300% added interest to loan companies without developing the women’s life? Apparently the loan companies are run by Mangala, Ranil & Old Royals’ friends. That is companies loss are restored not women’s life. You need to understand the Business Law a little bit better. While the woman has to have her calculus and Algebra home work completed on compounding interest formulas, companies has a responsibilities to Inform honestly the effect and use of the product they are sell(including the loan – as product). No company can stop a woman on the road, for any reason, holding on her dress until she settles the loan. Period! (Once again, you read the local news.)

      Could you list the families committed suicide by buying semi luxury items? Could you list the semi luxury items in that question you raised? How did you come to know that item is/was semi luxury item for that family in that question, but not essential? Is there an official list published by GOSL about the unwanted Semi-Luxury for individual family?
      Is this a Blind standardization to gain popularity?
      Do you get the point of this article? Government has a responsibility to help the people to live poverty free life. Poverty depends on countries lifestyle. In North Pole one doesn’t heat an igloo. But in New York City, in winter months, Landlord has to make sure house is heated when external temperature is below 55 Degree, irrelevant of whether tenant was up to date with rent or a court order obtained to vacate in a future date.

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    This charge of this high interests and this loan scheme should be a Criminal Fraud.

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    The moment Ameer talks about loan defaulters we ask the question, “Is this percentagewise more in N&E?” Ameer tries to find reasons as to why the defaulters are defaulting.
    Mangala please note: Forgiving loans is a short term superficial band-aid fix.

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    The fundamental problem of micro-financing is there is no proper oversight as to what the loan would be used for and whether the planned venture will generate sufficient income to repay the loan,and interest with money left for consumption. When micro loans are either used to subsidize consumption essential or otherwise, or when the planned venture has no real revenue generating potential the debtor continue to sink in to a hole. Ideally only the government or nonprofit ventures should give out microfinance loans, microfinance should not be a living subsidy. A better alternative would be a Universal Minimum Wage (a dole) to sustain people at a dignified level of subsistence.

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    Dr. Ameer Ali writes well. Yes, GoSL should subsidize the loans for the rural population. No, they should pay them for tilling the land and building up the organic food and livelihood industry (will create more profits for the overall population in the short and long run than the mega-development ones). But with Yahapalanaya’s ultimate aim to garner as much profits as possible for the S.Asian merger, they have no time to think in holistic terms for the Lankan masses. Theirs is about their own personal energy-eruption that the SAsian fusion will bring (with China as catalyst).

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