16 February

Kathmandu, Nepal

Abusive Microcredit And Exploitation Of The Poor

When : February 16 2024, 14:00PM – 15:30 PM Nepali Time
Where : Kathmandu WSF 2024
Co-organized by ATTAC Spain and CADTM International network

Abusive Microcredit and exploitation of the poor

Microcredit, which was and continues to be promoted as a means of lifting people out of poverty, has had disastrous consequences for poor populations in the Global South. With its abusive and predatory interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation.
and terms, it trapped these vulnerable people in debt, forcing them to take out multiple loans to pay off the previous ones and make huge sacrifices to repay them over years and decades. We are aware that women are by far the primary victims of microcredit, and we express our solidarity with their struggles against microcredit in Sri Lanka, as well as in Bangladesh, Pakistan, Nepal, India and all other parts of the world.

We strive for alternative possibilities like subsidies and grants, zero interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. loans without discrimination, socially and collectively managed community projects, etc. We call for the renewed development of free, high quality, public services and increases in the funds available for social spending.

We extend our solidarity to all labouring masses caught in the infernal webs of illegitimate debts. We resolve to continue our struggle as long as human beings labour under the burden of the debt system and the financial and microcredit institutions.


Amali Wedagedara, activist and researcher on microcredit, Sri Lanka

Sushovan Dhar, CADTM India, menber ot the WSF international secretariat and of Asia Pacific Social Forum

Farooq Tariq, General Secretary of the Pakistan Kissan Rabita Committee, a network of 26 peasant organizations and a coalition member of the international platform La Via Campesina

Nithya Joseph, Researcher at the International Foundation Programme on a UK Global Challenges Research Fund with the project “Depleted by credit?”


Fernanda Gadea, coordinator of ATTAC Spain


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