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UN: Sri Lanka: Microfinancing Companies Exploiting Indebted Women Alarms UN Special Rapporteur

Sunday 2 January 2022, by siawi3


Sri Lanka: Microfinancing Companies Exploiting Indebted Women Alarms UN Special Rapporteur

Saturday 4 December 2021,

by Sulochana Ramiah Mohan

Tomoya Obokata, the visiting UN Special Rapporteur on contemporary forms of slavery, including its causes and consequences, said he is alarmed about the micro-financing system in Sri Lanka, where many desperate women resort to sex work or demanding forms of labour, such as domestic work, which is rife with exploitation and abuse, to repay debts.

Obokata emphasised that it appears that many micro-financing companies are linked to sub-recruitment agents who facilitate migration for employment abroad, including countries in the Middle East and that these agents offer them incentive payments that are used to repay the loans on the condition that the women concerned migrate abroad to work.

“I am deeply concerned by the fact that the Government has to date not taken any effective and timely action in regulating and monitoring these exploitative micro-financing companies, with the result that they continue to operate unabatedly,” he said.

He also raised concerns about links between labour exploitation and discrimination based on gender, age, ethnicity, caste, class and other grounds in the country.

“Microfinancing is another acute problem affecting particular women from rural areas, many single-headed households. Many of them lack income-generating opportunities and decide to rely on loans to support their family and/or businesses as they are not able to obtain a loan from registered banks. Micro-financing companies are said to target them as easy prey. Their interest rates are very high, charging 20 – 30 per cent per week or even higher depending on the companies. I was also informed by several interlocutors that contracts by various companies are written in languages which the women do not understand (e.g. English), so they sign them without the full understanding of implications and consequences.”

Modern-day slavery

Due to the high interest rates of the loans, many women fall into debt bondage. This has led to suicides of reportedly over 200 women in the past years. So-called manpower recruitment agencies are often connected to micro-financing companies and they sometimes bring indebted women to work in the Free Trade Zone and elsewhere. It has also emerged that micro-financing agents who collect the money on a weekly basis, regularly ask for sexual favours in return for relaxing repayments, which is a clear exploitation of their vulnerability, he said.

In relation to other legislative proposals, the Government is considering laws to regulate the conduct of micro-financing companies which target vulnerable populations like women and sub-recruitment agents who engage in unethical and illegal behaviours to facilitate migration of Sri Lankan workers abroad he added.

He also stressed that he was made aware that members of the security establishment may be connected with micro-financing companies and therefore, complaints filed to the Police do not proceed, which hinders women’s access to justice and remedies.

Other entities such as the National Human Rights Commission are not sufficiently proactive in investigating the human rights abuses related to the operations of the microfinance companies. The Government has informed me that a legislative amendment is being introduced to put a system in place to regulate microfinancing companies, and I urge them to do so without further delay. “I was also informed that the Government has introduced mobile units of the Labour Inspectorate to various parts of the country including rural areas to raise awareness about available services and to provide assistance.”

Concerns voiced

Sri Lanka has a robust legal framework to tackle contemporary forms of slavery and been making progress in other areas, such as increasing minimum age of employment from 14 to 16 and the establishment of a child labour free zone. However, Sri Lanka must become more inclusive and embrace all sectors of society if it is to overcome major issues such as caste-based discrimination and labour exploitation which in some cases may amount to forced labour and servitude, the UN expert said.

“A society needs to be inclusive to thrive and access to quality education, training and decent work is essential to end contemporary forms of slavery for all. The Government must listen to the people, including the most marginalised ones and the silence on sensitive issues such as caste-based discrimination must be broken in order to trigger positive change.”

During his visit, Obokata met officials from the Government, the Human Rights Commission of Sri Lanka, civil society organisations, trade unions and the UN, as well as human rights defenders, academics, migrant workers and victims of labour exploitation. Obokata also visited two textile factories in the Free Trade Zone in Katunayake, and made trips to Kandy and several tea estates.

“I witnessed first-hand that Malayaha Tamils are disproportionally affected by marginalisation, discrimination, exploitative working conditions and appalling living conditions,” the expert said.

Obokata received reports about instances of child labour in domestic work and in other areas of the informal economy and the services industry. He also voiced concern over persistent gender inequality and discrimination affecting women. He also said low wages are not keeping up with the rising cost of living in Sri Lanka.

Obokata received reports about the recurrent employment of retired military officials in private businesses such as tea plantations and garment factories. He was informed of regular harassment and intimidation of civil society representatives, human rights defenders and members of trade unions and a shrinking civic space, including through the application of COVID-related restrictions to freedom of assembly.

Sex workers of all gender identities and sexual orientations face discrimination, stigma and a particular risk of being sexually exploited and abused, including by law enforcement officials.

Another sector which is highly gendered is domestic work he added. The vast majority of workers are women and girls and this is the least regulated industry as normal requirements, such as access to sick/annual leave, minimum wage, and other entitlements do not seem to apply. “I have been informed by a number of interlocutors of the harsh-working conditions with five increased workload without sufficient pay or rest. Subsistence is not always given, and instances of physical, verbal or even sexual abuse have been reported.”

Sulochana Ramiah Mohan