Debt and the poor | Daily News

Debt and the poor

In October last year the Governor of the Central Bank went on a mission to find solution for indebtedness in the north having seen the scale of the problem and the scale of the suffering experienced by the families distressed in debt with solutions on three levels.

1. How to reduce the debt burden

2. How to structure new credit so that the problem is not repeated

3. Raising awareness and financial literacy among the population to prevent a repetition and prolonging of the situation.

This malaise is not confined to the poor in the global South. Illustrated by efforts of the Church of England.

Church expands network of support on money and debt

Scale of problem debt at ‘epidemic levels’, says Archbishop of Canterbury. “Achieving economic stability together with economic justice for all is too easily overlooked.”

He continues: “The scale of problem debt in our country is at epidemic levels. Jesus calls us to be hope-bringers and peace-givers. Where there are still lives filled with an oppressive hopelessness, where darkness has a grip, our mission is not done.”

In 2013, the archbishop voiced concerns about energy price hikes and he also said in that year that the Church of England wanted to drive payday lenders out of business through the creation of credit unions.

The Church of England has embarked on an ambitious programme to grow a nationwide network of support for people to help them take action on money and debt. A pilot scheme based in churches in London, Southwark and Liverpool dioceses will be expanded to dioceses in the rest of the country under plans put forward by the Just Finance Network, formerly known as the Church Credit Champions Network.

More than 260 ‘credit champions’, or volunteers in local churches have been trained so far within the pilot scheme to help people tackle issues from promoting budgeting skills to work on increasing the size of credit unions. Over 300 churches are already involved in the scheme carrying out mass sign-ups to credit unions, setting up credit union branches in church buildings and encouraging local employers to set up pay roll saving for their staff. The programme is on target to bring in more than 3,000 new credit union members by the end of this year and have saved more than £2 million by helping people access affordable credit rather than high cost pay day lenders.

The proposals for an expansion to the network are the latest stage in work first started by the Archbishop of Canterbury’s Task Group on responsible credit and savings. The network, now managed by Church Urban Fund, will build on initiatives already under way in churches across the country.

Churches and individuals are being encouraged to take part in fundraising to support the expansion of the network through the Archbishop of Canterbury’s Mustard Seed Appeal, which is being launched today.

Paul Hackwood, Executive Director of Church Urban Fund, said: “More than eight million people in the UK are struggling with debt, with many resorting to high cost loans to cover the cost of basic necessities.

“Church of England parishes have shown amazing initiative in tackling this real need through work such as promoting budgeting skills, championing credit unions and supporting community-led finance schemes.” The leadership of the Archbishop of Canterbury and the work of the Church of England parishes have been crucial to the success so far of the pilot scheme.

We hope that people will be generous in responding to this appeal to allow us to build further on this vital work.”

The Archbishop of Canterbury, Justin Welby, said: “Churches across the country have responded enthusiastically and with great generosity to the work of supporting credit unions and other forms of responsible credit and savings”.

Achieving economic stability together with economic justice for all is no easy task.

Leaving no one behind: the imperative of inclusive development

A central pledge contained in the 2030 Agenda for Sustainable Development is to ensure that no one will be left behind and to see all goals and targets met for all nations, peoples and for all parts of society, endeavouring to reach the furthest behind first. While 37 per cent of the world’s population lived under the international poverty line of $1.90 a day in 1990, the proportion had declined to 12.7 per cent by 2012.

However, the situation of those living in deep poverty has not improved significantly and many people who have escaped poverty remain vulnerable to it.

Trends in inequality also suggest that prosperity has not been equitably shared, with income inequality having risen within many countries in the last 20 years. In general, income inequality across social groups constitutes a significant share of total income inequality, although its weight varies strongly by country.


women, worst affected

Government announced an effort to address an exploitative cycle of debt, in which women were worst affected especially in the war-affected districts of the North and East and drought- affected districts in the North Central and North Western Provinces:

The measures included:

* Extensive relief package for 12 drought affected districts.

* Writing off micro-finance loans taken by women in these regions.

* Offering a state subsidized loan scheme.

Microfinance loans taken by women valued at Rs 100,000 or less will be written off under the relief programme. The Government will pay back these loans, while the micro-finance companies have come to an agreement to waive the high interest attached to these borrowings, Minister Samaraweera noted. Minister Samaraweera said his Ministry had decided to submit a Cabinet proposal to cap micro-finance interest rates at 30% per annum in a bid to prevent these companies from lending to vulnerable communities at ‘predatory’ interest rates.

The Government would also work to better regulate these micro-finance companies and bring amendments to the Micro-Finance Act in order to prevent the manifestation of similar debt traps and exploitative lending programmes.


Timely Measures

Social inclusion is presented as the process of improving the terms of participation in society for people who are disadvantaged on the basis of age, sex, disability, race, ethnicity, and economic and migration status.

Measures taken by our government are timely. The future requires policies ideally subscribed to by all shades of politics, commerce and others with three sets of indicators:

* Those that measure access to opportunities, namely education, health and other basic services;

* Those that measure access to employment and income; and

* Those that measure participation in political, civic and cultural life. 


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