Drowning in Debt

BOGALAY, Irrawaddy delta—Aye Kyu, 42, chokes when she talks about the burden of her debt.

"Every day the money lenders chase us, telling us to hurry up and pay them back. But, how can we pay off our debts when there is no work?" the mother of two said.

Aye Kye has been living with her family in a temporary shack since Cyclone Nargis destroyed her home in Setsan, a village in one of the hardest hit areas 150 minutes by boat from Bogalay Township near the mouth of the Irrawaddy delta.

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Laborers extract salt from salt fields in Laputta Township of the Irrawaddy delta in April. Many laborers have had to borrow money to buy rice for their families' daily survival. (Photo: Reuters)

Before the cyclone, Aye Kyu and her husband regularly found work as day laborers in the paddy fields belonging to farmers in the surrounding villages.

In the wake of the cyclone there has been little work, forcing Aye Kyu and her husband to take loans at rates of interest as high as 25 percent a month. 

With monthly household monthly expenses amounting to nearly US $50, Aye Kyu’s family can only earn around $30 in present conditions.

“We have no choice but to go into debt. We have to buy rice for the children,” Aye Kye said, adding that she owed the equivalent of almost $400 dollars to the money lenders.

Thousands of cyclone-affected households in the delta are falling into a debt trap because job opportunities are still few even though 18 months has passed since the cyclone.

Cyclone Nargis, which devastated Rangoon and the Irrawaddy delta in the first week of May last year killed almost 140,000 people and affected more than 2 million, destroying the livelihoods of hundreds of thousands.

Agriculture and fisheries, the two major industries in the storm-affected area, were severely hit.

Despite assistance from the international community and the government, neither industry has fully recovered.

Day laborers who relied on finding work on fishing boats or on the farms have had to borrow money. Most say they had to take out loans to buy rice.

According to the Rapid Food Security Assessment released by the United Nations’ World Food Programme in March, the vast majority—83 percent of sampled households—reported being in debt because they had to buy food.

Interest rates vary from place to place, with some money-lenders taking between 5 and 20 percent and others between 25 and 50 percent, depending on the situation of the borrowers.
Though interest rates are high, the cyclone-affected debtors find it difficult to borrow money unless they can find loan guarantors in their villages.

“We want to pay off our debts as quickly as we can,” a cyclone-widow from Setsan Village said, “but we have to struggle just to earn enough for one meal a day.”

Humanitarian agencies are calling for agriculture and fisheries to be put back on a more secure basis as quickly as possible.

“As long as these industries are not fully back to normal, you cannot expect day laborers to have enough job opportunities,” said an official from CARE, a UK-based charity working in Burma since 1995.

“Restoring these sectors is the best way to help day laborers in the long term,” the official said.