When wages collapse and food becomes unaffordable, borrowing ceases to be a choice and becomes a necessity for survival.
By 2023, more than half of Sri Lankan households were in debt. Loans intended for small enterprises now bought rice and medicine. Families borrowed from one shark to pay another, caught in the familiar spiral of compound interest.
The microfinance sector stepped in. True, it’s better to have loans from an organization that will merely take your land if you can’t repay, as opposed to a local money lender who’ll break your legs and then take your land. But while the central bank recognizes four licensed lenders, dozens operate without oversight. Interest rates have climbed from 17 percent a decade ago to effective rates over 220 percent today.
Women represent 84 percent of borrowers—2.4 million of them trapped in this system. The consequences go beyond financial distress. Women face harassment and intimidation; some are pressured for sexual favors. More than 200 suicides between 2019 and 2022 have been directly linked to microfinance debt.
The cruelest irony lies in recent legal reforms. The colonial-era Land Development Ordinance historically favored male inheritance, often dispossessing women who had worked the land. While the 2022 amendments promoted gender equality, allowing women fairer inheritance rights, the same reforms also streamlined land sales. Women could now inherit their family plots just in time to lose them to creditors. What appeared as progress became another mechanism for dispossession. Legislative equality arrived hand-in-hand with economic dispossession.
This captures perfectly the contradictions of development policy: microfinance was supposed to empower women, but has become the main obstacle to sustainable farming practices that might offer real security.
The targeting is not accidental. Women make more reliable debtors—more likely to sacrifice for their families, less likely to default or disappear. This strategy echoes a much older method of controlling women’s economic power, one perfected in these very hills four centuries ago.
When Kusumāsana Devi ruled the Kingdom of Kandy as queen regnant in 1581, she possessed something her male rivals coveted: absolute sovereignty over one of the island’s most prosperous territories. But 16th-century political custom made a direct military assault on a reigning queen diplomatically complicated. Her enemies found a more elegant solution. They orchestrated a series of forced marriages, each designed to transfer her royal authority to a husband who would then conveniently die or disappear, leaving power in male hands. Through intimate relationships weaponized for political control, they systematically stripped her of sovereignty without ever raising a sword.
Today’s microfinance industry has perfected the same logic with ruthless efficiency. Unable to seize women’s labor directly, lenders trap them in financial relationships that achieve identical results. The 2.4 million Sri Lankan women caught in this system cannot simply be robbed—that would be theft. Instead, they are bound by contracts that make their dispossession appear voluntary, even virtuous. The debt collectors, like Kusumāsana Devi’s suitors, understand that the most effective chains are those that masquerade as intimate care.
Yet the women have begun to organize.
The Collective of Women Affected by Microfinance stages protests and hunger strikes. Their demand is refreshingly simple: cancel the debt.
Debt operates at the national level with the same ruthless logic. After defaulting on $46 billion in 2022, Sri Lanka must earn hard currency at any cost. The IMF insists on foreign-exchange generation, which locks the country into the same plantation model the British imposed 150 years ago. Agricultural exports became the economic lifeline; tea alone is worth $1.3 billion annually, but rubber and coconut still have a market.
Sri Lanka’s economy is, in other words, structured almost exactly the same as when the country was called Ceylon and under British colonial rule.
This is an excerpt from an article by academic Raj Patel, in which he reflects on the 3rd Nyéléni Global Forum, held in Sri Lanka in September 2026, and the call for collective action on debt justice. Click to read the full version.