Daru Churchill: Prevention of debt bondage with microfinance

The paper by Patrick Daru and Craig Churchill of the International Labour Organization Social Finance Programme, titled “The Prevention of Debt Bondage with Microfinance and Related Services: Preliminary Lessons,” reports on the first 18 months of the Dutch-funded South Asian Project for the Prevention of Debt Bondage, which began piloting microfinance-based schemes in Bangladesh, India, Nepal and Pakistan in June 2000. The authors state that debt bondage is most common in agriculture but also in mining, gem polishing, brick-kilns, carpets, textiles and domestic service, and that victims tend to be from the poorest and least educated segments, low castes and religious minorities. The paper states that forced labour is defined by ILO Convention 29 and debt bondage by the 1956 Supplementary Convention Against Slavery as the combination of credit and labour contracts in which labour value is not applied to liquidate the debt. It summarises national legislation including India’s Bonded Labour System (Abolition) Act 1976, Nepal’s Kamaiya Labour (Prohibition) Act 2001 and Pakistan’s Bonded Labour Act 1992, and describes local systems such as Kamaiya, Haliya, Hari, Jeetham and Gothi. The report identifies social exclusion, asymmetric information, multiple roles of employers and in-kind linkages as vulnerability factors. It outlines five intervention areas—awareness, identification, release, rehabilitation, prevention—and documents implementing partners serving agricultural workers, sex workers and weavers. The paper states that by 2002, Nepal adopted a Kamaiya Act, India approved its first technical cooperation project, and Pakistan adopted a National Action Plan Against Bonded Labour.